EPF account: Pension profit guidelines that EPFO members could think about
The Employees’ Provident Fund Organisation (EPFO) has made it necessary for each EPFO member to contribute 12 per cent of its fundamental wage in a single’s Employees’ Provident Fund (EPF) account. According to tax and funding specialists, EPF account is a government-backed necessary retirement fund accumulation device for an investor however it additionally offers pension profit beneath EPS (Employees’ Pension Scheme). They stated that as per EPS Pension rule, one can change into eligible for ₹1,000 to ₹7,500 month-to-month pension beneath the EPS profit, offered the EPFO member has contributed in EPF account for at the very least 10 years.
Speaking on the EPS scheme eligibility standards beneath EPFO norms; Harsh Roongta, Head at Fee Only Investment Advisers stated, “To become eligible for EPS benefit under EPFO rules, one needs to contribute in one’s EPF account for at least 10 continuous years. So, it’s advisable for EPF account holder to continue with the EPF account at new organisation at the time of job switch. Going for EPF withdrawal is not advisable at the time of job switch.”
Roongta — who’s a SEBI registered funding advisor too — went on so as to add, “When an employee contributes 12 per cent of its basic in EPF, similar amount is contributed by its recruiter too. But, out of 12 per cent recruiters’ contribution, only 3.67 goes into EPF. Rest 8.33 per cent goes in EPS.”
EPS Pension Calculator
Highlighting the pension profit beneath EPS pension guidelines, Harsh Roongta stated that as per the EPFO pension rule, one can get ₹1,000 to ₹7,500 month-to-month pension after contributing in a single’s EPF account until she or he attains 58 years of age.
On how one’s pension is calculated beneath EPS scheme; SEBI registered tax and funding knowledgeable Jitendra Solanki stated, “To calculate monthly pension of the EPF account holder, the formula used is [(Pensionable salary + Pensionable Service)/70]. In simple words, pension will be higher if the period of EPF contribution is high and pension will be lower if the year of EPF contribution is low.”
Solanki additionally stated that one turns into eligible for month-to-month pension after attaining 50 years, however in that case one’s pension will get diminished by 4 per cent for yearly falling wanting 58 years. For instance, if an EPF account holder opts EPS pension profit on the age of 55, then his or her pension will get diminished by 12 per cent (4×3). so, one ought to go for pension solely after 58 years of age.
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