When you think of securing your financial future then retirement planning always comes to mind. At the adult phase of your life, you can fulfill your financial needs with low or high-value loans. But no one will help or cover your expenses after retirement, at an elderly age. So, where all other options fail, only EPFO offers pension benefits reliable enough to plan your wealthy retirement. “The EPS scheme’s higher pension benefits provide much-needed financial security and peace of mind as far as retirement expenses are concerned. This scheme also helps us to follow the principle of saving first and then doing expenses. Besides, it is a very attractive and beneficial scheme. The decision to opt for it or not should be taken only after a detailed analysis of the financial status of an individual. The higher contribution may be suitable in the following conditions.”
Whether to Apply or Avoid Higher Pension Benefits from EPFO?
A higher pension may be highly beneficial for you when, after retirement, you are not going to have any passive income source like any annuity plan or personal pension scheme benefit.
“If you are not willing to plan and manage funds for retirement, then a higher contribution is advisable for you. It will give you peace of mind for your golden years.”
“If you have already set aside the emergency fund then the higher contribution may be suitable for you, as a higher contribution reduces your liquidity which you may require in case of emergency. If you are able to manage your short and medium-term financial goals with less in-hand salary (due to higher contributions) then you can think of a higher contribution,” mentioned business today.
How to Calculate Higher Pension?
“The formula for calculating EPF higher pension is as follows: Monthly pension amount = (Pensionable salary X pensionable service)/70. The EPF will soon issue a circular showing the mode of calculating higher pensions,” mentioned Cleartax. in
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Conclusion
Higher Pension Scheme from EPFO “benefits individuals who want a higher monthly pension but do not require a huge lump sum upon retirement. The higher pension contribution will increase the monthly pension amount but reduce the EPF lump sum given to an employee upon retirement. Thus, individuals who have other investments and will receive a lump sum upon its maturity can opt for the higher pension scheme. However, the monthly pension is taxable, but the lump sum EPF amount given after retirement is tax-exempt.”
