EPFO Releases Computation System for Higher EPS Pension

The Employees Fund Organisation has disclosed the method through which a higher EPS pension will be calculated for the employees who are opting for it, under Employees Pension Scheme. It is to be noted that the high EPS pension calculation criteria will be different for those who retired before September 1st, 2004 and those who retired after this date.

Higher EPS Pension Calculation:

For Those Who Retired Before September 1st, 2004

If an employee retired before September 1, 2004, the higher EPS pension will be calculated based on the average monthly salary computed after considering the pay of the last 12 months from the date of retirement or the date of exit from the retirement fund.

For Those Who Retired on or Before September 1st, 2004

The calculation will be done based on the average monthly salary computer after taking 60 months of service in consideration from the retirement date or date of exit from the retirement fund.

Why is the Date September 1, 2004, so Important?

“It is important to note that the government revised the pension calculation formula in September 2014. Till August 31, 2014, the average salary during the 12 months preceding the date of retirement, was taken into account. However, from September 1, 2014, the government revised it to 60 months. This change resulted in a lower pension for those retiring on or after this date,” mentioned by economictimes.

“Currently, the formula for calculating pension under the EPS scheme is equal to:

=(Average salary of 60 months X service period) divided by 70.”

“The ‘average salary’ above is the basic salary of an employee. However, the salary used for calculation of higher pension for those opting for higher EPS pension will be the full actual salary (inclusive of allowances etc instead of just the basic salary).”

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“Here is an example to understand this. For instance, assuming you joined the EPS scheme in October 2008 and your retirement is in September 2033. Here, the service period is of 25 years (September 2033 – October 2008). The average salary for pension calculation will be calculated on the basis of your average pay in the last 5 years (60 months) of working,” mentioned economictimes.