The Central government has notified the much-awaited minimum monthly pension of Rs 1,000 per month to the Employees’ Pension Scheme holders. This scheme is managed by EPFO (Employees’ Provident Fund Organization).
Employees Provident Fund & Employees’ Pension Scheme:
Every month 12% of your “salary” is contributed towards EPF account.
Your employer also contributes 12% of the salary to your EPF a/c. But out of this 12%, 8.33% goes towards EPS and only 3.67% is invested in Employees’ Provident Fund (EPF). You receive the pension amount from The Employees’ Pension Scheme.
Apart from EPF and EPS , your employer also bears three more expenses.
- Contribution towards Employees’ Deposit Linked Insurance(EDLI) – 0.5% of your salary
- EPF Administrative Charges – 1.1% of your salary
- EDLI Charges – 0.01% of your salary
(The “Salary” definition for the purpose of EPF is “ Basic salary + Dearness Allowance + Allowances).
The central government recently released a notification regarding the Employees’ Pension Scheme. Let us now look at the new amendments.
- Under the modified scheme, the minimum monthly pension for widows has been fixed at Rs 1,000 and for children at Rs 250 per month. Similarly for the orphans it has been fixed at Rs 750 per month.
- The amended scheme also provides that the “Pensionable Salary” will be the average monthly pay drawn during the contributory period of service for 60 months preceding the date of exit from membership of the pension fund. Earlier the pensionable salary, which became the basis for computation of pension, was an average monthly pay drawn for 12 months.
- 50 Lakh more formal sector workers can become EPF a/c holders.
- 28 Lakh pensioners will gain from the minimum pension entitlement of Rs 1,000
Inform about these changes to your EPF a/c’s nominee too. Cheers!