EPFO Higher Pension: Here’s How Much Pension You Will Get on a Monthly Basis

The maximum amount that an employee can currently contribute to their EPF account is 12% of their Basic Salary plus Dearness Allowance. The employer makes an equal 12% payment, of which 8.33% goes to EPS and 3.67% goes to the employee's EPF account.

The statutory pay cap of Rs. 15,000 determines the employer's 8.33% contribution, thus only Rs. 1250 (8.33% of Rs. 15,000) is deposited into your EPS account each month.

Employees who have been EPF members since before 1 September 2014 would have the opportunity to contribute 8.33% of their real Basic+DA salaries to EPS in compliance with a Supreme Court decision. To show how much more pension you may receive by choosing the EPFO higher pension option, here’s an example:

If your Basic Pay is Rs 40,000:

Every month, 12% of your Basic Salary (Rs 4800) is sent to your EPF account. EPS receives Rs. 1250 of the employer's contribution, which is also equivalent to 12% of your basic salary, and your EPF account receives the remaining Rs. 3550.

If you opt for the higher pension: According to the Supreme Court, employees would have the option of choosing a greater EPS contribution depending on their real income, therefore 8.33% of your basic pay, or Rs 3332, can be allocated to EPS. There is a catch, though.

The EPFO will retroactively take the amount from your PF account towards EPS from your joining date or November 1, 1995, whichever is later, if you choose the higher pension option.

You may be eligible for a pension of Rs 37,714 [(Rs 8000033)/70] if your pensionable salary is Rs 80,000.

If you don’t opt for the higher pension: If you choose the higher pension, the pension that will be given to you when you retire will be determined using your real Basic Salary + Dearness Allowance (if applicable).

For instance, the pension would be Rs 18,857 [(Rs 4000033)/70] if your average pensionable pay (Basic + DA) during the previous 60 months was Rs 40,000 at the time of retirement.