Recently, Union Labor Minister Mansukh L Mandaviya had indicated that in view of rising inflation, the government can increase the basic pay limit under EPFO from Rs 15 thousand to Rs 21 thousand.
This increase is expected from 2025. Let us understand with an example how an employee can get a pension of Rs 10 thousand.
If you are a member of the Employees Provident Fund Organization (EPFO), then you can get a monthly pension of ₹ 10,000. Today we are telling you the complete calculation that if your monthly basic salary is Rs 15 now, then by retirement you will be entitled to get a pension of Rs 10,000. Let us tell you that to become eligible for pension under EPFO, a person must complete at least 10 years contributing as an EPS member. Pension under EPS starts at the age of 58.
Preparations to increase the basic pay limit to 21 thousand
Recently, Union Labor Minister Mansukh L Mandaviya had indicated that in view of rising inflation, the government can increase the basic pay limit under EPFO from Rs 15 thousand to Rs 21 thousand. This increase is expected from 2025. Let us understand with an example how an employee can get a pension of Rs 10 thousand.
Let us take an example that Mohan joined a company in January 2015. At that time his basic pay limit was Rs 15,000. Now it is expected that the basic pay limit will be revised in January 2025. Then the basic pay limit will increase to 21 thousand. Mohan will retire in 2049 after working for 35 years. Now let us know from the EPF formula how to get 10 thousand pension.
Formula to calculate EPS pension
EPS = Average pensionable salary x pensionable service/70
- Mohan’s first term of job: January 2015 to December 2024 (10 years), Basic Pay Limit: 15,000
- Mohan’s second term of job: January 2025 to December 2049 (25 years), Basic Pay Limit: Rs 21,000
- Part-1: (Pension calculation for 10 years)
- Average pensionable salary: Rs 15,000
- Pensionable service: 10 years
- Pension = Rs 15,000×10/70 = Rs 2,142.86 per month
- Part-2: (Pension calculation for 25 years)
- Average pensionable salary: Rs 21,000
- Pensionable service: 25 years
- Pension = Rs 21,000×25/70 = Rs 7,500 per month
Total pension after 35 years of service = Rs 2,142.86 + Rs 7,500 = Rs 9,642.86 per month. In this way, Mohan will receive a pension of about Rs 10,000 per month on retirement.
