Calculation of Pension Under Employees’ Pension Scheme (Series-3)

Saturday, August 26th, 2017 Amritesh 21 responses

Calculation of Pension under Employees’ Pension Scheme (EPS)

Employees’ Pension Scheme (EPS) provides pension to the EPF Subscribers on attaining the age of 58 years. However, the amount of pension is determined depending on the pensionable service and contribution period of the Subscriber. I have already posted articles on Benefits available under the Employees’ Pension Scheme. In this post I will discuss the method of Calculation of Pension under Employees’ Pension Scheme (EPS). One may refer to my earlier posts related to EPS in the link provided below:-

Employees Pension Scheme (Series-1)

Benefits Under Employees’ Pension Scheme (Series-2)

Employees’ Pension Scheme (EPS): Increase Your Pension with Deferred Withdrawal

In case of New Entrants:- (Joining Service After 15.11.1995)

Monthly Superannuation/Early Pension = Pensionable Salary X Pensionable Service /70

Pensionable Salary shall be limited to Rs 15,000/- per month as per notification dated 01/09/2014.

Pensionable Salary was hiked from Rs 5000 w.e.f 01/06/2001 to Rs 6500 and continued till 31/08/2014.

While calculating Pensionable Salary we have to take the average of monthly pay drawn during 60 months preceding the date of cessation of membership.

In case of early pension, the amount of pension shall be reduced by 4% for every year the age fall short of 58 years.

If an individual has rendered Pensionable Service for 20 years or more, than his/her pensionable service will be given an additional weightage of +2.

Minimum Pension is fixed at Rs 1000/- per month.

Calculation of Pension under Employees’ Pension Scheme (EPS)

Calculation of Early Pension (Age 50 -57 years)

The pension will reduced by 4% for each year falling short of the stipulated 58 years. The original pension should be multiplied by following factor to arrive at the actual pension which may be received by the Subscriber.

Employee Pension Scheme (EPS)

Deferred Pension (On Attaining 58 years till 60 years of Age)

Individuals may now defer their Pension till the age of 60 years with or without contribution to EPS Fund. The deferral of pension for 1 year will ensure hike of 4% while 2 years deferral will provide 8.16% hike on the actual pension amount.

Contribution made by the Subscribers during the deferral period will be used for calculating the Pensionable Service and Contribution Period. In case of Non Contributory Deferral, the Subscribers will still be eligible for 4% or 8.16% increase as per the opted deferral period. But same would not be considered to determine the Pensionable Service or Contribution Period.

Furthermore, the deferred period will not be considered for determining the eligibility for Pension.

Commuted Pension (Discontinued since 2008)

A member is eligible to Pension under the scheme, may opt on completion of 3 years from commencement of scheme to commute maximum of 1/3 rd of his/her pension so as to receive 100 times the monthly pension so commuted while the balance pension will be paid on monthly basis.

But Commutation of pension has been discontinued and Subscribers no longer have the option to commute 1/3 rd of their pension.

Return of Capital (Discontinued since 2008)

A member may opt to draw Reduced Pension and avail Return of Capital under following alternatives.

Employee Pension Scheme

Return of Capital provision has been discontinued through Amendment to the scheme in 2008.

Calculation of Pension for the Period before 15.11.1995 (Family Pension Scheme, 1971)

Pre 15.11.1995 the following procedure was adopted to calculate the pension.

EPS Pension Calculation

The above amount is the benefit payable on completion of 58 years of age as on 16.11.1995. For the calculation of pension benefits before 58 years (if a member do not complete 58 years of age on 15.11.1995, his past service benefit will be increased by the below factor – Early pension cases ) the above benefit is multiplied by the TABLE- B factor to arrive at the past service benefit.

Employee Pension Scheme Calculator

Past Service benefit:

Pensionable Salary   X   Pensionable Service 
70

subject to minimum of Rs.335, Rs. 438, Rs.635 for receiving early pension ( before 58 years) for date of commencement of pension between 01/04/1993 and 15/11/2000, 16/11/2000 and 15/11/2005, 16/11/2005 respectively
AND
subject to minimum of Rs.635, Rs.438, Rs.335 for receiving pension on or after 58 years for date of commencement of pension between 01/04/193 and 15/11/2000, 16/11/2000 and 15/11/2005 , 16/11/2005 respectively.

(If member has joined after 15.11.1995, only Pensionable Service Benefit is applicable)

Proportionate reduction: Arises if the past service is less than 24 years and aggregate pension calculated is less that Rs.500/-.

Illustration:-

Date of Birth: 01/01/1960

Date of Joining: 01/01/1985

Salary as on 15/11/1995: Above Rs 2500/- per month.

Salary on Completion of 58 years as on 01/01/2018: Rs 15,000/-.

Past Service Approximately: 10 years (rounded off)

Compensation: Rs 85/-. (For Past Service as per Table A)

Factors as per Table B (difference between 01/01/2018 and 15/11/1995): 6.064

Past Service Benefit (Table A x B): Rs 85 x 6.064= Rs 515.44

Pensionable Service from 15/11/1995): 22 years

Additional Weightage: 2years

Pensionable Salary: Rs 15,000/-.

Pension Admissible: 15000 x 24/70 = Rs 5142.00

Total Pension: Rs 5142+Rs 515 = Rs 5,557/-. (approx).

Note:- Pensionable Salary comprises of average of last 60 months salary, thereby in the above illustration it will include Rs 6500 for first 12 months which has been ignored to simplify calculation and simplify understanding.

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Amritesh is an experienced professional in the field of HR, Finance and Compliance. He is currently working in the IT Industry with an US based firm. He took up Blogging as a hobby which eventually turned into passion. He primarily focuses on topics related to Personal Finance, HR, Compliance and Technology.

All the opinions/suggestions/views expressed on this blog are just for sharing information. Readers are requested to consult their respective financial advisers and experts before taking any decision. Views shared through post or comments are personal opinion meant for reference of the readers. These should not be considered as Investment Advice or Legal Opinion. The Blog or the Author does not take any responsibility regarding any such action taken by any Individual.
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21 Comments on "Calculation of Pension Under Employees’ Pension Scheme (Series-3)"

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srp
Guest

if i have another pension scheme, will i be eligible for eps pension

Amritesh Sinha
Guest

If your salary is under 15k pm and covered under EPF or you are already enrolled under EPS then you will eligible for Pension irrespective of other pension schemes you have subscribed.

RAJ KUMAR chauhan
Guest

pl.calculate the actual pension on above example ie 12 month 6500 and 48 months 15000

RAJ KUMAR chauhan
Guest

pl.calculate the actual pension on above example ie 12 month 6500 and 48 months 15000

D S R C MURTHY
Guest

EPS-95 calculation they are calculating pension in four heads.
1.past service pension
2.calculation on Rs.6500/- contribution period.
3.calculation on Rs.15000/- contribution period..here they taking 60 months average is pensionble salary.
4.service weightage 2 years bonus is adding to (2+3) pension.
in this calculation serious voilation is going on.

JYOTI
Guest

MY AGE 50 YEARS
BASIC SALARY RS 14385/-
SERVICE 10 YEARS
WHAT AMOUNT OF MY PENSION IN THE AGE OF 51 YEARS

P.V.A. NARASIMHA RAO
Guest

Sir
My date of birth is 20/04/1957 and my date of joining in the last organization is 02/05/2005. Ignoring all my earlier service, I have applied for Superannuation Pension.
Superannuation age (58 years) is 20/04/2015 and as such
service period is 9 years 11months and almost completion
of minimum 10 years service period.My last pensionable salary is Rs 15000/-. As per formula (Pensionable Salary X Pen. Service/ 70) I have to get my pension Rs.2142/- per month. But Provident Fund Authorities have sanctioned an amount of Rs.1000/-. Which is correct or not kindly clarify.
70)

Hum Basnet
Guest

Dear Sirs,
I had worked in delhi based co. w.e.f. 20-09-1984 to 15-10-2015 other detials are as under:-
Date of joining : 20-09-1984
Baisc salary at the time of joining : 414
Date of retirement : 15-10-2015 (age: 55 years)
Basic salary at the time of retirement : 9500/-.

Kindly inform me what amount of pension i will get .

Hum Basnet
e-mail humbasnet20@gmail.com

Ashok P
Guest

Sir,
I liked the presentation of the article.
I request you to kindly clarify whether the Table B shown in the article is related to Past Service or Pensionable Service. My comment has reference to line numbers 7 and 8 of the illustration.
Thanks for the informative article.

Shankar Kar
Guest
Dear Sir, I have received a copy of PPO a few days back . According to the PPO my pensionable salary is 11600, Eligible service is 12 years and I am 1 yr 11 months short of 58 years of age as on 01 Jan 2018. I pension have been fixed at 1199 pm which I feel is wrong . I have written an email to Regional Pension Commissioner , but not sure whether I would receive a reply. Could you please advise whether their calculation is correct ? According to me it should have been simply reduced by approx… Read more »
MUKUL M BHATT
Guest

BIRTH DATE-01-01-56.FPS JOINING-NOV 84,EPS 95 JOINING 15-11-95-SALARY ON 15-11-95RS. 8000.RETIRED 31-12-13.SALARY RS.115000/-.MY EMPLOYER CONTRIBUTED UNDER EPS95 UPTO CEILING LIMIT,FROM TIME TOTIME.
WILL YOU LPHELP TO CALULATE PAST SERVICE PENSION BENIFIT ?

ABHAY KUMAR DEO
Guest

I started my job (private sector) in 5th march,1993 (salary-above-2500)and left 10th july,2008(15 years)afterwords did not work anywhere, now after completion 59 years, I have applied for EPS pension, how much pension now, I will get!

Mrs Jaya Ramachandran
Guest
Mrs Jaya Ramachandran

Sir,
I am working with a pvt company since 01.02.1984
My date of birth is 17.06.2018. I would like to take premature retirement and avail the pension immeidately. If I retire during this year how much pension monthly will get as per the new laws.