The way for a big pension after retirement has also been opened for those working in the private sector. The maximum limit of Rs 15 thousand basic has been removed for the calculation of pension. This means that now even in the private sector people will get a chance to get pension according to their last salary. However, ever since the decision in this regard has come, the question among the people is that what and how will the new system of pension actually affect them? Some people are believing that lump sum PF raising is a better option than pension. By understanding this whole system, you can decide which option would be right for you. This | Amit Tiwari is explaining the system and change in simple words.
This is the arrangement
• Employees get pension for life after retirement under the Employees' Pension Scheme (EPS) 1995. In case of death of the employee while in service or after retirement, his dependent gets half of the pension.
There is no employee contribution to the Pension Fund for EPS. On behalf of the employer, a contribution equal to 8.33 percent of the basic salary of the employee is given. This contribution is only out of the total 12 percent contribution given by the employer in the PF.
• Due to the ceiling of maximum basic salary of Rs 15,000 for pension calculation, only Rs 1,250 per month goes to the pension fund of an employee with a basic salary higher than this. This calculation is done on the basis of monthly basic pay of Rs 15,000. Now, the limit of maximum basic pay has been removed for the calculation of pension. Has been removed. Is. This means that now the employer's contribution equal to 8.33 per cent of the salary of the employee will go to the pension fund. Pension will also be calculated on this basis.
Fund will be affected like this
• If the monthly basic salary is Rs 50,000, then the contribution of the employee and the employer are Rs 6,000 each. • The entire Rs 6,000 contribution of the employee goes into the PF account. Out of Rs 6,000 of the employer, Rs 1,250 goes to the pension fund
This will affect the pension
Formula for calculation of pension Average Basic Pay of last 60 months Number of years of service / 70
Calculation based on the maximum limit of Rs.15,000 (if total years of service is 30) 15,000*30/70 = Rs.6,428
• In this way till now, irrespective of the final salary of the employee, after 30 years of service, his pension will be Rs.6,428.
Calculation on new basis
Suppose you have been working for 25 years. You have to retire after five years. Today, your basic salary is Rs.50,000. And for the next four years, if you assume a 10 percent annual increase, then the average basic salary for 60 months i.e. five years will be Rs 67,051 per month.
61,051*30/70=Rs 26,164 monthly
Employer's remaining Rs 4,750 goes to employee's PF account
In this way, Rs 10,750 goes to the employee's PF account every month.
In the new system, out of Rs 6,000 of the employer, Rs 4,165 will go to the pension fund.
In this way, Rs 7,835 will go to the employee's PF account every month.
Adopting multiple systems will not affect your monthly salary. Only the employer's contribution going into the PF account will be affected. From different calculations, it is concluded that the new system will reduce the amount of PF funds you will get at the time of retirement, it will be approx.
Will be covered in pension for five to seven years.
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