Now Reading: EPFO pension scheme: eligibility, calculation and rules explained
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EPFO pension scheme: eligibility, calculation and rules explained
The Employees' Provident Fund Organisation (EPFO) provides pension benefits to subscribers with over 10 years of service under the Employees’ Pension Scheme 1995 (EPS-95). Employers contribute 8.33% of wages and the Centre…
The Story in Brief
The Employees' Provident Fund Organisation (EPFO) provides pension benefits to subscribers with over 10 years of service under the Employees’ Pension Scheme 1995 (EPS-95). Employers contribute 8.33% of wages and the Centre adds 1.16% to the fund. Pension is calculated as (pensionable salary x pensionable service) / 70. For a member earning the wage ceiling of Rs 15,000 and contributing for 35 years, the monthly pension works out to Rs 7,500.
Members can start drawing a reduced pension from age 50, or the full pension at 58. They can also delay up to age 60. Benefits include superannuation, early, family, disablement, and widow/orphan pensions. The EPFO guarantees payout even if an employer defaults. Beneficiaries must submit a life certificate every 12 months to keep receiving payments.
The Indian Opinion
Complaints about low pension under EPS-95 ignore a key fact: the formula is actuarially tied to salary and service. A worker earning the wage ceiling of Rs 15,000 for 35 years gets Rs 7,500 monthly, modest, but guaranteed even if the employer defaults. The real test is whether the government will raise the wage ceiling, which has not changed since 2014, to reflect inflation and actual earnings. Until then, the scheme remains a safety net, not a retirement solution.
Source: livemint.com
This story was synthesised by AI from the source linked above.
