EPFO’s new pension Update: Eligibility, 2014 wage cap impact explained
Zee News
This change can help certain retirees receive a higher pension amount based on their actual salary, rather than a capped wage limit.
New Delhi: The Employees’ Provident Fund Organisation (EPFO) has recently updated how pensions are calculated for some workers under the Employees’ Pension Scheme (EPS). This change can help certain retirees receive a higher pension amount based on their actual salary, rather than a capped wage limit.
How EPFO Pension Used to Work
Under the existing system, both the employer and employee contribute 12 percent of the basic salary each to the Employees’ Provident Fund (EPF). Out of the employer’s share, 8.33 percent goes to the pension fund (EPS) and the rest to the EPF account.
However, since a 2014 rule change, there was a wage ceiling on how much salary could be used to calculate the pension. That means even if a person earned more, only up to a Rs 15,000 monthly wage was considered for pension purposes. This limited the pension amount for higher-paid employees.
What’s Changed With the New Rule
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