Calculator EPFO Higher Pension, EPFO Higher Pension Scheme Application Form 2023, Latest News, Benefits, Last Date, Link to Apply Online for EPFO Higher Pension Calculation on EPFO Portal
On Monday, the Employees’ Provident Fund Organization (EPFO) extended the deadline for workers to choose a higher pension to May 3, 2023. This extension is available for workers who began working before September 1, 2014, and continued working on or after that date but were unable to activate their joint option under the Employees’ Pension Plan. To learn more about the EPFO Higher Pension Scheme 2023, including its highlights, benefits, eligibility criteria, contributions under EPS, considerations to make before choosing a higher pension, and steps to apply for an EPFO Higher Pension, read below.
EPFO Higher Pension Scheme 2023
Every month, 12% of an employee’s basic pay, along with any permanent components like DA, is deducted and deposited into the Employees Provident Fund (EPF). The employer matches this contribution, and the EPF account accrues annual interest. Upon retirement, the employee receives a lump sum payment. While the employer’s 8.33% contribution may sometimes be allocated to the Employee’s Pension Plan (EPS), which guarantees pension payouts after retirement, the employee’s 12% contribution is entirely deposited into their EPF account. The government introduced some changes on September 1, 2014, such as using a maximum salary of Rs. 15,000 to calculate the 8.33% EPS contribution.
Before September 1, 2014, the salary cap for contributions to the Employees’ Pension Scheme (EPS) was Rs 6,500, but companies could choose to contribute more based on actual pay. However, employees hired after September 1, 2014, earning more than Rs 15,000 per month, were no longer eligible for the EPS benefit. These changes were met with opposition from labor unions, who took legal action against the EPFO in high courts. In November 2022, the Supreme Court heard the EPFO’s appeal regarding this matter and issued a decision.
Summary Highlights EPFO Higher Pension 2023
|Scheme Name||EPFO Higher Pension Scheme|
|Deadline Extension||By Employees’ Provident Fund Organization (EPFO)|
|Last Date||May 3, 2023|
Advantages & Benefits of EPFO Higher Pension Scheme
- The EPFO Higher Pension Scheme offers several benefits, including a larger monthly pension during retirement if you opt for a higher pension.
- This can be particularly beneficial if you don’t have any other sources of income.
- Additionally, the pension amount you receive is fixed and not affected by market fluctuations.
- It is calculated based on your years of service and average wage, providing a stable and reliable source of income during retirement.
Eligibility Criteria of EPFO Scheme Higher Pension 2023
To be eligible for the EPFO Higher Pension Scheme:
- You must be a member of the Employees’ Provident Fund Organization (EPFO) and be entitled to receive a pension following retirement.
- You must also have been a member of the Employees’ Pension Plan (EPS) for at least 10 years.
- The minimum age requirement for the higher pension scheme depends on the year in which you joined the EPS, with the minimum age being either 50 or 58 years old.
- Meeting these eligibility criteria is essential to qualify for a higher pension under the EPFO Higher Pension Scheme.
EPFO Higher Pension Scheme Donation under EPS
Following the 2014 amendment, there were issues with pension contributions on higher salaries. Many workers reported that they had exercised the shared option to contribute to the pension on their higher income amount. However, the EPFO denied the joint option submitted by several employees. Consequently, employers contributed 8.33% of the pension on employees’ actual pay, but the pension computation used the pensionable salary of Rs. 15,000 instead. To receive higher pensions based on the contributions made on actual wage amounts, many employees filed cases in High Courts. Eventually, this case was taken up by the Supreme Court, which issued its ruling on the matter.
|Employee Status||Exercise of Joint Option||Eligibility for 8.33% of a Higher Salary’s Pension Contribution||Higher Pension Claim Mode|
|Employees in service as of 01- September-2014||Exercised joint option||Yes||By filing a higher pension claim application|
|Employees retired before 01- September-2014||Exercised joint option||Yes||By filing a joint option and higher pension claim application|
|Employees in service as of 01- September-2014||Not exercised joint option||Yes||By exercising the joint option within 03/05/2023|
|Employees retired before 01- September-2014||Not exercised a joint option||No||Not applicable|
EPFO Higher Pension Scheme Application Last Deadline
The Employees’ Provident Fund Organization (EPFO) has extended the deadline for individuals to apply for a higher pension under the Workers’ Pension Plan (EPS) to May 3, 2023. This option is available to members who started working before September 1, 2014, and continued to work on or after that date but were unable to activate their joint option under the Employees’ Pension Plan. The EPFO has issued this directive to allow older members to seek larger pensions based on their actual basic wages. The cap for pensionable salary has been set at Rs 15,000 per month, but members can now make contributions at a higher rate of 8.33 percent to the EPS. This move is aimed at providing individuals with greater financial security during their retirement years.
Plans to make before Choosing Higher Pension
To choose a higher pension plan, one must consider some key factors, including the cost and tax implications:
- Cost: Firstly, the higher pension plan involves paying more towards the EPS, which is a significant cost. The employer contribution is limited to 8.33% of Rs. 15,000 per month, but members can choose to contribute up to 8.33% of their actual pay to the EPS. Therefore, members whose monthly salary exceeds Rs. 15,000 need to make an additional voluntary contribution to the EPS to avail a higher pension.
- Taxable vs. Tax-Fees: Secondly, the pension amount is taxable, unlike the lump sum amount from the provident fund which is tax-free. So, if the member has other sources of income and falls under a higher tax bracket, the pension amount would be reduced due to taxes, and it is essential to consider this tax implication before choosing a higher pension plan.
- Instead Lump sum payment: To choose a higher pension, individuals must be aware that this option would come at the expense of a lump sum payment, and hence, it should only be selected if they prefer a greater pension after retirement to a higher lump sum payment. It is important to consider the financial needs and goals of individuals before making a decision.
- In case of the subscriber’s death, their legal heirs and nominees are only eligible to receive 50% of the qualifying pension that the subscriber would have otherwise received. Therefore, if the subscriber passes away before expected, the family may suffer a significant financial loss compared to the higher lump sum option. Hence, individuals should carefully consider their family’s financial situation and the impact of their decision on their family before choosing the higher pension option.
- Long-Term Planning: The decision to opt for a bigger pension should be based on your long-term retirement plans. If you have other sources of retirement income such as personal pensions or investments, then you may not need a larger EPS pension. However, if you have no other source of retirement income, then choosing a higher EPS pension may be beneficial. Your personal financial situation and retirement goals will play a significant role in deciding whether a larger EPS pension is right for you. It is important to carefully consider the costs and benefits of this option. Seeking the advice of a financial advisor can also help you make an informed decision. Remember, choosing a larger pension will mean sacrificing a lump sum payment, so be sure to carefully weigh your options before making a decision.
Process Apply Online EPFO Higher Pension Scheme 2023
To apply for the EPFO Higher Pension Scheme, employees should follow a few steps.
- First, they need to visit the official website of the EPFO Unified Member portal.
- Once the homepage of the website opens, they should look for the “Pension on Higher Salary: Exercise of Joint Option under para 11(3) and para 11(4) of EPS-1995 on or before the 3rd May 2023” link under the important links section.
- Clicking on this link will take them to a new page with two options: application form for validation of joint options and application form for joint options.
- They should select the application form for joint options to proceed with the application process.
- After selecting the appropriate option, the applicant needs to fill in all the required details on the application form that will appear on the screen.
- It is essential to fill in all the necessary fields with accurate information to avoid any discrepancies in the future.
- Once all the details have been entered, the applicant needs to click on the “Submit” button to complete the application process.
- After submission, the EPFO will digitally register the application and provide a receipt number to the applicant.
- After an applicant submits their application for the EPFO Higher Pension Scheme, the EPFO will digitally register each application and assign a unique receipt number.
- These applications will then be sent to the appropriate employers for verification, who will check them through an e-signature or digital signature before proceeding with the application process.
- Once the applications are verified, they will be transformed into e-files by the Regional Provident Fund Commissioner (RPFC).
- The responsible dealing assistant will then review the documents and forward the matter to the section account officer or supervisor for further review.
- In case any discrepancies are found, the concerned account officer or supervisor will note them and send the application to the Assistant Provident Fund Commissioners (APFC)/RPFC-II for further examination.
- Finally, the APFC/RPFC-II will review the application and notify the applicants of their higher pension decision through email, mail, phone, or SMS.
It is important for applicants to keep track of their application status and respond promptly to any requests or discrepancies noted during the review process to ensure a smooth application process.
Calculation Formula- EPF Higher Pensions 2023
The EPF pension formula is used to calculate the monthly pension amount that an individual is eligible for. The formula takes into account two factors: the pensionable salary and the pensionable service. The pensionable salary is determined by taking the average of the last 60 months’ wages earned by the individual. The pensionable service refers to the number of years for which payments were made to the EPS account.
If an employee superannuates at the age of 58 years after providing pensionable services of more than 20 years, a weightage of 2 years will be added to the service duration. However, it is important to note that there is a 35-year limit for pensionable service.
By using the EPF pension formula, the monthly pension amount can be calculated as follows:
Monthly pension amount = (Pensionable Salary * Pensionable Service) / 70.
This calculation takes into account the individual’s pensionable salary and the number of years they have contributed to the EPS account, and produces an estimate of the monthly pension amount they are eligible for.