Employees Provident Fund Organization (EPFO) in India has recently given a great news for private sector employees. EPFO has decided to increase the pension amount by improving the pension scheme. This step has brought relief for millions of private employees, who had been expecting an increase in their pension for a long time. This change will not only protect the future of employees, but will also improve their standard of living.
In this article, we will know in detail what this decision of EPFO means, which employees will be eligible for it, and other important information related to this change. Let’s know in detail about this new initiative.
EPFO Pension Scheme: Overview
This new announcement made by EPFO aims to provide better financial security to private sector employees. The scheme focuses on employees who want to remain financially strong after their retirement. A brief observation of this scheme is presented in the table below:
| Name of the scheme | EPFO Pension Scheme (Pension Scheme) |
| Beneficiary | Private sector staff |
| Declaration date | recently |
| Increase in pension amount | Amended rates |
| Management institution | Employee Provident Fund Organization (EPFO) |
| Target | Financial security in old age |
| Ability | EPFO Member |
| Applied area | All India |
EPFO Pension Increase: What is this initiative?
EPFO has made several significant changes to make the pension scheme more attractive and beneficial. Now private employees are likely to get more pension on the basis of their service period and contribution. This initiative will be especially beneficial for those who work in a company for a long time and contribute to the EPF account regularly.
Main things about pension hike
- Increase in pension amount: EPFO has revised the existing pension rates, which will benefit the employees more.
- Eligibility: Only those employees can avail this scheme, who are members of EPFO and contribute regularly.
- Retirement Security: The main objective of this initiative is to ensure economic security after retirement.
Who can take advantage of this facility?
Some conditions and eligibility have been determined to take advantage of this new initiative. Note the points below:
- The employee should be an active member of the EPFO.
- The service period of the employee should be at least 10 years.
- Regularly contributed to EPF account.
- The benefit of pension scheme will be available only after retirement.
Pension Calculation: How is the calculation?
The EPFO pension is calculated on a certain formula. This formula depends on the average salary and service period of the employee.
Calculation Formula:
= × 70
,
70
For example:
- If the average monthly salary of an employee is ₹ 15,000 and has served for 20 years, then he will have a monthly pension:
15,000 × 2070 = ₹ 4,285
70
15,000 × 20
= ₹ 4,285
Thus, the higher the service period, the higher the pension amount.
What will be the benefits of the new scheme?
This new initiative of EPFO will provide many benefits, including:
- More financial security: Economic conditions will be strengthened by getting more pension after retirement.
- Improvement in standard of living: Increased pension amount will help employees live better life.
- Future concerns less: Financial troubles will be less in old age.
Challenges and limitations
Although this scheme seems quite beneficial, some challenges are also associated with it:
- Not all employees will get its benefit as some people cannot fulfill the minimum qualification.
- Companies may face additional financial pressure as they may have to increase their share of contribution.
EPFO Pension Scheme
Will this scheme be applicable to all employees?
No, only employees who are members of EPFO and fulfill the minimum qualification can take advantage of it.
Will the pension amount increase immediately?
No, this change will gradually apply and the process will be fixed for it.
Will companies also have additional contribution?
Yes, companies may have to increase their share contribution.
Disclaimer:
This article is based on government announcements and media reports. However, all the information of the scheme has not yet become officially clear. Readers are advised to get information on the concerned department or official portal before taking any decision.
