EPFO: Amidst the discussions about the 8th Pay Commission, a great news has come for the employees. Employees’ Provident Fund Organization i.e. EPFO ​​has again restored the old facility of Higher Pension. This is the same facility which was closed in the year 2014. Now eligible employees will be able to avail higher pension on the basis of their full basic salary and DA.

Who will get the most benefit?

This facility is especially beneficial for those employees who had opted for Higher Pension before September 1, 2014. Such employees will now be able to make pension contributions on the basis of their actual basic salary.

Senior employees, whose basic salary is higher, their chances of getting a hefty pension after retirement will increase. However, the lump sum PF amount may be slightly less, but the monthly pension will be stronger.

Not all employees will get benefits

Keep in mind, this feature is not for everyone. Employees who have joined the job after September 1, 2014 will not be eligible for Higher Pension. For them, the maximum limit of pensionable salary will be Rs 15,000 only.

Apart from this, employees who have never joined the Higher Pension option before will also not be able to avail the benefits of this scheme.

Why was this facility closed?

Before 2014, employees could make pension contributions based on their entire basic salary. But on September 1, 2014, the rules were changed and the limit of pensionable salary was fixed at Rs 15,000.

After this change, the pension of higher paid employees became limited. For this reason, there was confusion on this issue for many years, which has now been removed by EPFO ​​to a great extent.

How are EPF and EPS calculated?

According to the current rules of EPFO, both the employee and the employer deposit 12-12 percent of the basic salary and DA in the EPF account. Of the employer’s contribution, 8.33 percent goes to the Employees’ Pension Scheme, while 3.67 percent is deposited in the PF account.

Only the amount deposited in EPS is received as monthly pension after retirement. At present, the minimum pension is fixed at Rs 1,000 and the maximum pensionable salary is fixed at Rs 15,000, which makes the maximum pension around Rs 7,500.

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Big signal before 8th Pay Commission

Amidst the preparations for the 8th Pay Commission, restoration of Higher Pension facility is being considered a big step. This will provide financial security to lakhs of employees after retirement.

Now the question is whether the government will also change the pension limit in future? At present, this relief is no less than a big gift for the employees.