EMPLOYEES PENSION SCHEME-1995

Determination of pensionable salary:

Average monthly pay (Basic + DA) drawn in the span of 12 months preceding
the date of exit / superannuation.

But this has upper ceiling of 6500/- or 1500/-

Clause 11(3):

The maximum pensionable salary shall be limited to Rs 6500 /- per month.

*Provided that if at the option of the employer and employee, contribution

paid on salary exceeding Rs.6500/- per month from the date of commencement of
this Scheme

Or

From the date salary exceeds Rs.6500/- whichever is later, and 8.33 per
cent share of the employers thereof is remitted into the Pension Fund,
pensionable salary shall be based on such higher salary.

In our case (BSNL), our salary is more than 6500 at the time of entry into
EPF and we have not exercised the option. Hence, the pensionable salary will be
6500/- (15000).

Hon’ble Supreme Court has said that the dates are not cutoff dates to
determine the eligibility of the employer – employee to indicate their option.
 Now, EPFO with approval of Ministry of Labour and employment has
conveyed that, members can exercise their option to get the benefit of pension on
higher salary (actual salary, earlier as we have not exercised any option the upper
limit is 6500 (15000) ) on receipt of joint option of the employee and employer.

This is not the pension we are going to get. It is only how to arrive at
pensionable salary.

Monthly member pension:

Minimum eligible service: 10 years.

Superannuation age: 58 years. (Not 60 years).
Monthly pension = Pensionable salary * pensionable service
70

Case – 1:

With 6500 or 15000 as upper ceiling:

Let us take 2005 batch JTO. Pensionable service is 10 years (suppose if

he exit from the scheme today).
In this case with upper ceiling of 15000/- pensionable salary
Pension : (15000 * 10) / 70 = Rs. 2143/- per month as on this date.

Case – 2:
We have exercised benefit of pension on higher salary:
Pensionable service is 10 years.
Pensionable salary: basic: 30000 + DA :35100 = 65100/-

Pension: (65100*10)/70 = 9300/- per month as on date.

What will happen if we exercise option for higher pension scheme?

Employee contribution will remain in our EPF account.

Instead of 1250 ceiling in pension contribution, it will be 8.33% of
BSNL contribution from now onwards.
For previous periods the difference of 8.33% BSNL contribution – Rs.
1250 will be transferred from our EPF account to pension fund with
interest.
That means our EPF balance will reduce. Our pension will increase.