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The Employee Pension Scheme (EPS) is a social security program run by the Employees' Provident Fund Organization (EPFO). This system provides pension to employees working in the organized sector when they retire at the age of 58 years. Both existing and new EPF members can participate in the EPF scheme.
However, to avail this pension facility under EPS, it is necessary to contribute to EPS for a minimum of 10 years i.e. the employee has to work for 10 years. While the maximum pensionable service is 35 years. Let us tell you the formula through which you can calculate how much pension you will get after retirement.
EPFO Pension Calculation Formula
How much pension you will get in EPS is calculated on the basis of a formula.
The formula is- EPS = Average Pay x Pensionable Service/70.
Here average salary means basic salary + DA. Which is calculated on the basis of last 12 months. The maximum pensionable service is 35 years. The maximum pensionable salary is Rs 15,000. Because of this, the maximum pension amount is 15,000×8.33= Rs 1250 per month. In such a situation, if we understand the EPS pension calculation based on maximum contribution and years of service, then – EPS = 15000 x35/70 = Rs 7,500 per month. In this way, the maximum pension from EPS can be Rs 7,500 and the minimum pension can be up to Rs 1,000. You can also calculate your pension amount through this formula.
The employer contributes 3.67 per cent of the employee's salary to EPF and 8.33 per cent to EPS. The interest rate for FY 24-25 is 8.25 per cent. The total contribution by the employee and employer to the EPF account will be Rs 2,350.
Let us understand this with an example:
Suppose an employee joins a company in April 2024 and his basic salary is Rs 1,5000. The total EPF contribution for April will be Rs 2,350. No interest will be paid by the EPF scheme for the month of April.
The total EPF contribution for May will be Rs 4,700 (Rs 2,350 + Rs 2,350). The interest on this will be Rs 32.31 (Rs 4,700 * 0.689%). This calculation will continue till the employee retires.
How much pension will be received on a basic salary of Rs 15,000?
Monthly Salary (Basic+DA) = Rs 15,000
Contribution to EPF – 12% of basic salary
Present Age- 25 Years
So your total invested amount will be Rs 10,15,416. The interest will be Rs 50,37,234. You will get a total of Rs 60,52,650.
This calculation is based on the current interest rate of 8.25 percent which may change in the future. The actual return may also vary due to leap years.
