EPS Pension Calculator: Get Up To Rs 60,52,650 With Rs 15,000 Basic Salary - Use This Formula
The Employee Pension Scheme ( EPS ) is a social security initiative managed by the Employees’ Provident Fund Organization (EPFO), designed to provide financial security to employees in the organized sector upon their retirement at the age of 58. Both existing and new members of the Employees’ Provident Fund (EPF) can benefit from this scheme.
To qualify for an EPS pension , employees must contribute to the scheme for at least 10 years, meaning they must work for a minimum of 10 years. The maximum pensionable service under the scheme is 35 years. Below, we explain the formula used to calculate the pension amount you can expect after retirement.
To qualify for an EPS pension , employees must contribute to the scheme for at least 10 years, meaning they must work for a minimum of 10 years. The maximum pensionable service under the scheme is 35 years. Below, we explain the formula used to calculate the pension amount you can expect after retirement.
Understanding the EPS Pension Calculation Formula
The pension amount under EPS is determined using the following formula:
EPS Pension = (Average Salary × Pensionable Service) / 70
In this formula:
- Average Salary refers to the sum of the basic salary and dearness allowance (DA), calculated based on the last 12 months of employment.
- Pensionable Service is the number of years of service, with the maximum allowed being 35 years.
Given this, the maximum contribution towards the pension is calculated as ₹15,000 × 8.33% = ₹1,250 per month. Using the formula, if an employee has contributed the maximum amount for 35 years, the calculation would be:
EPS Pension = ₹15,000 × 35 / 70 = ₹7,500 per month
Thus, the maximum monthly pension under EPS can be ₹7,500, while the minimum pension can be ₹1,000. Employees can use this formula to estimate their pension amount.
Employer and Employee Contributions
Employers contribute 3.67% of the employee’s salary towards the EPF and 8.33% towards the EPS. For the fiscal year 2024-25, the interest rate is 8.25%. The combined monthly contribution from both the employee and employer towards the EPF account totals ₹2,350.
Example Calculation: EPS Pension on a ₹15,000 Basic Salary
Let’s illustrate this with an example. Suppose an employee joins a company in April 2024 with a basic salary of ₹15,000. The total EPF contribution for April would be ₹2,350. No interest is credited for the first month.
In May, the total EPF contribution increases to ₹4,700 (₹2,350 + ₹2,350). The interest on this amount would be ₹32.31 (calculated as ₹4,700 × 0.689%). This pattern of calculation continues until the employee retires.
If we assume the following:
- Monthly Salary (Basic + DA) = ₹15,000
- EPF Contribution = 12% of basic salary
- Current Age = 25 years
By the time the employee retires, their total invested amount would be ₹10,15,416, and the interest earned would be ₹50,37,234, resulting in a total amount of ₹60,52,650.
Please note that this calculation is based on the current interest rate of 8.25%, which is subject to change in the future. Additionally, the actual returns may vary due to factors like leap years.
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