How to Calculate EPF Pension under EPS Scheme? : Guide

Lets mention a scenario. A boy makes 20 rounds of a ground. he does such a lot diligence by assuming that a minimum of 10 calories would be burn in one round of this ground. Therefore in 20 rounds, it might be 200 calories.

1 Round = 10 Cals. (assumption)

20 Rounds = 200 Cals.

But when he reaches home filled with sweat, and checks that only 120 calories got burnt. Why so? Because there’s this very weird rule. Within the 1st round, you will have burnt only 2 calories per round. Therefore in 10 rounds, you will have burnt 20 calories. In remaining 10 rounds, you will burn 10 calories per round which equals to 120.

First 10 Rounds = 2 Cals./Round

10 Rounds = 20 Cals.

Last 10 Rounds = 10 Cals./round

10 Rounds = 100 Cals.

Total Cals. burned = 120 Cals.

Its quiet a strange rule, and this is exactly what also happens with “Employee Pension Scheme”.

Employee Pension Scheme (EPS):

As we know that Employee Pension Scheme (EPS) is one of the three schemes. It was introduced in the year 1995 with the main aim of helping employees in the organized sector. Its a scheme ensured by Employees’ Provident Fund Organization (EPFO).The other two are the Employee Provident Fund (EFS) and Employee Deposit Linked Insurance Scheme (EDLI).

Under this scheme, if you have served more that ‘9 years 6 months’, then you become eligible for pension and whenever you turn to 58 and in some conditions before it then you can apply for pension.

Eligibility For Pension Service > ( years 6 months) Apply for Pension @ 58 

EPS scheme not only gives pension to the member, it also gives pension to its dependence after his/her death. Infact there is an option for disablement too. If you will closely at your Passbook, you can see three columns where contributions are placed, that is

  • Employees share contribution
  • Employer share contribution
  • Pension Contribution

And as we know, from Employer contributions the eligible members of EPS get 8.33% of PF wages.

Particulars EPF Wages EPS Wages
Maximum Contribution The contribution is 12% on salary The Contribution is limited to 8.33% on salary up to Rs.15,000, i.e. Rs. 1250

What must you know about EPF contributions?

If the total pensionable service is more than 10 years, then you become eligible and after that you cannot take the withdrawal of pension. When you turn 58 years of age then you can start your pension.

But if your service is less than 10 years, then at the time of retirement or after leaving the job, will have to wait for a minimum of 2 months to close the EPS account and after that only you can access the benefit of withdrawal. This withdrawal benefit is also known as Return of Contribution which means the amount contributed by you should returned to you as per your contribution.

So we g0t to know the fact that the amount of contribution made by you is shown in the passbook, is not the amount which you will get exactly. So you are eligible to get what exact amount? For this, we need to know some basics of EPS.

Basics of EPS:

  1. Cap on EPS Contribution :  The first and foremost thing is since 1st September 2014, members who are contributing towards their EPS, have been imposed by the government, a ceiling of 8.33% of rupees 15,000 which is equal to rupees 1250. So, you have to inform the PF department that you want to contribute on full wages otherwise it would not be done. Maximum EPS contribution should be rupees 1250 and not more than this. So kindly check your passbook. And if the amount contributed is more than rupees 1250 then it is wrong and one might face a problem.
  2. Members Joining after Sep, 14 with salary above 15,000 are not eligible for EPS : The second most important concern is that after 2014, if you are becoming a member for the first time and your salary is more than rupees 15,000 per month, which is very common in Software or IT industry, then you are not eligible to become a member of EPS. So if EPS is contributed from such employee salary, then it is wrong.
  3. No interest on Pension shares:  Apart from this keep a check on the fact that there is no interest on pension shares. Whenever the interest is updated, its on PF and not on Pension.
  4. No advance withdrawal from pension share: You cannot withdraw advance from pension share.
  5. TDS Deduction : On any day when you are your money from pension, no TDS will be deducted from it. People think that TDS might have been deducted because of not submitting form 15G, that’s why pension amount got reduced, but its not like that, no TDS is deducted from pension cares.

What is an EPF calculator?

The EPF calculator shows us the quantity of cash which will be stored in your EPF account at retirement. You will calculate the amount, which incorporates both contribution and the employer’s contribution also with the accrued interest on the investment.

In the EPF calculator, in the formula box, you are suppose enter your:

  • Current age
  • Your basic monthly salary
  • Dearness Allowance,
  • your contribution to the EPF
  • Your retirement age up to 58 years.
  • Can also enter the current EPF balance if you have the idea.
  • After entering the requisite information, the calculator will display your the EPF funds available at retirement.

How does an EPF calculator work?

To understand how the EPF calculator works, let us have an example.

Employees basic salary + dearness allowance = Rs 12,000

Employees contribution towards the EPF = 12% * 12,000 = Rs 1,440

Employers contribution towards the EPF = 3.67% * 12,000 = Rs 440

Employers contribution towards EPS = 8.33% * 12,000 = Rs 999.6

The total contribution that is made by the employer and employee towards the EPF account of the employee = Rs 1,440 + Rs 440 = Rs 1880

You have the interest rate at 8.5% for FY 2020-21.

You can also calculate the interest rate which is there for each month as

8.5%/12 = 0.70833%

Example, the employee joined the Firm in January 2020. The total EPF contribution for January will be Rs 1880. The EPF scheme will not pay any interest for January.

The calculation is done similarly for the subsequent months.

To use the ClearTax EPF Calculator?

  • First enter your current age by using the slider.
  • You then fill the basic monthly salary and the dearness allowance up to a maximum limit of Rs 15,000.
  • The percentage of contribution to your EPF is 12%.
  • Fill retirement age up to a maximum limit of 58 years.
  • You can add the current EPF balance if you are aware of the amount.
  • The ClearTax EPF Calculator will help in displaying the EPF funds that will be available at retirement.

How to find your EPF Pension number?

Employees who are under the Employees’ Pension Scheme (EPS) are given a number or a code that will help them getting pension after their retirement.

The number given to the pensioners is called Pension Payment Order (PPO). The Employees’ Provident Fund Organization (EPFO) allots this number to every employee who retires from any organization.

To get your EPF Pension number, have a look at the following steps:

  • Search the official Website of EPFO and visit it.
  • The homepage will appear, under online services, click on Pensioners’ Portal option.
  • Click on ‘Know your PPO number’ option.
  • Enter your ‘Bank Account Number’ or ‘Member ID (PF Number)’.
  • The PPO number will be displayed on the screen, once you submit the details successfully.

How to transfer EPF money online?

  •  In the event Branch transfer or of a job change, PF can be transferred using the Universal Account Number (UAN) which is registered.
  • Visit the official EPF member portal
  • Complete the process of registration
  • Log in the given spaces once you get the login credentials
  • Visit the Online Transfer Claim Portal
  • There request for EPF transfer by entering your details
  • You will have to submit Form 13 if you are not eligible to make the transfer claim online.
  • If you are eligible, then you can do it without submitting Form 13.
  • Click on the option ‘Request for Transfer of Funds’ and provide it with your previous employment details.
  • Get it authenticated.
  • After filling the details, you will receive an SMS mentioning your PIN.
  • With the tracking ID generated, you can track your application.

For More Information

Contact the official website :

https://www.epfindia.gov.in
For an employee: [email protected]
For an employer: [email protected]
You can also contact at their toll-free number: 1800118005.

I hope this article was insightful. Let us know down in the comments if it was helpful. Please feel free to ask your queries regarding Pension calculation and dont forget to share it with your friends and family.

Thank you for reading!

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