EPF India Higher Pension with Employee

Pension Scheme (EPS), Conditions, Formula,

Calculation at Various Stages for Retirement
What is EPF Higher Pension
 As per Hon’ble Supreme Court of India order in civil Appeal No(s) 10013-10014 of 2016 arising
out of SLP No 33032-33033 of 2015, all the members of Employees Pension Scheme (EPS) 95
which is a social security scheme offered by Employees Provident Fund Organisation (EPFO) will
benefit of the actual salary in the pension exceeding wage limit of Rs. 15000 per month, which
would get benefit by contributing 8.33% of actual salary instead of ceiling salary.

Who are eligible for EPF Higher Pension

 All the employees who joined as a member in Employees Provident Fund Organisation (EPFO)
before 1st September 2014 are eligible for EPF Higher Pension.

An EPF member or employee withdraw EPF amount already is

eligible for Higher Pension
 If the employee / member of EPFO ready to repay the balance amount under Employees
Pension Scheme (EPS) is eligible for EPF higher pension
Terms and Conditions for EPS of EPFO
 An employee must have been in the service for at least 10 years.
 One can get the pension after the age of 58 only and the reduced pension of EPFO’s EPS can be
withdrawn after the age of 50.
 An EPF member can also defer your pension till the age of 60, and If you opt for deferment, the
pension would increase by 4% for every deferred.
 The Pension (EPS) is given to the family after the untimely death of employee, and also an
employee can get a pension if s/he gets totally incapacitated.

How to apply for EPF Higher Pension Option

A joint declaration option form of member / Employee and Employer has to submit to
concerned Regional EPF office to join in EPF higher pension.

Current EPS of EPFO

 Pension contribution is 8.33% of ceiling salary

o Ex: 8.33% of Rs. 15000 = Rs. 1250

Higher EPS of EPFO

 Pension contribution is 8.33% on ACTUAL SALARY

In both the cases the pension contribution is from 12% of employer contribution only.

Amount Deposited in EPFO Employees Pension Scheme

 Current EPS
o The amount deposited in EPF account is 12% of salary from employee + 12% of salary by
employer – Rs. 1250 (8.33% of 15000)
 Higher EPS
o 12% salary of Employee contribution + 3.37% salary of employee contribution by
employer + 8.33% salary of employee contributed by Employer is deposited in EPS

The amount deposited in the EPF account is more in current EPS option, but now when opts for
higher pension, the amount deposited in the EPS account is more in Higher EPS option.

There is interest on the deposited amount in the EPF, but there is no interest on the deposited
amount in the Employees Pension Scheme.
EPF Higher Pension Formula
Current EPS

 15000 (Ceiling Salary) * Pensionable Salary / 70

o Ex:- 15000*35/70 = 7500

Higher EPS

 Average of 60 months salary * Pensionable service / 70

 Ex:- 100000*35/70 = 50000

Let us check with an example for EPF Higher Pension by assuming Basic and 100% DA merged in
3rd PRC and 4th PRC of PSU for an employee working in 2017 and retires in December 2035.

Case Study of 2017

Case Study of 2035

Particulars Current EPS Higher EPS

242450 (Average Salary of

Pensionable Salary 15000
60 Months)

Suppose in above example employee serves for 33

35 35
years (i.e 2 years extra if service is more than 20 years)

Pension = Pensionable Salary * Years of Service) / 70 15000*35/70 = 7500 242450*35/70 = 121225

EPF Fund Value under both options on simple interest

24745280 16880133
at 8%

Differential Amount in Current EPS 7865147

If your life expectancy is around 8 years after retirement, you are at break even as per above
sample calculation, but life is uncertain, and 3rd PRC / 4th PRC has not been taken into
consideration and in 2017, 2027, 100% DA has been merged with Basic without any fitment to
be in safer side, where you can simulate after changing the figures for EPS.

Know Your Reduced Pension of EPFO

Age Factors to Multiply

50 0.7837

51 0.808

52 0.833

53 0.8587

54 0.8853

55 0.9127

56 0.9409

57 0.97

58 1
Enhanced Pension After 58 under EPS
In the reduced pension formula, the pension decreases by 4% for every year. Similarly, you
would get 4% more pension for every extra year. However, you can get only two such years as
this benefit is not available after the age of 60.

If employee have VRS / CRS before 50 years of age

There is no pension till attending the age of 50 years, Pension is as per given above reduced
table If employee serviced for 15 years with Avg 60 months salary is Rs 40000

Current EPS

 Pension= 15000*no of years service/70

o Ex : 15000*15/70 = 3214

Higher EPS

 Pension= Avg 60 months salary *no of years service/70

o Ex : 40000*15/70 = 8571

Difference Pension when opted for Higher Pension = 8571-3214 = 5357

If employee have VRS / CRS before 50 years of age but

serviced 20 Years
In this case also, there is no pension till attending the age of 50 years in both the cases, Pension
is as per given above reduced table, If employee serviced for 20 years with average 60 months
salary is Rs 100000

Current EPS

 Pension= 15000*no of years service/70

o Ex : 15000*22/70 = 4714

Higher EPS

 Pension= Avg 60 months salary *no of years service/70

o Ex : 100000*22/70 = 31,428

At the age of 50 years, Pension = 31428 * 78 / 100 = 24513

Difference Pension when opted for Higher Pension = 24513 – 3676 = 20837
 Particulars Current EPS Higher EPS

81834 (Average Salary of

Pensionable Salary 15000
60 Months)

Suppose in above example employee serves for 22 years

22 22
(i.e 2 years extra if service is more than 20 years)

15000*22/70 =
Pension = Pensionable Salary * Years of Service) / 70 81834*22/70 = 25710
4714

EPF Fund Value under both options on simple interest at

6384946 4535834
8%

Differential Amount in Current EPS 1849113

EPFO EPS FAMILY PENSION
Assumed if employee serviced for 15 years with average 60 months salary is Rs. 40000

Current EPS

 If member death in service, then the Family Pension = (15000 * 20 of years of service / 70) /2
o Ex: (15000 * 15/70) / 2 = 1607.

 If Member death after retirement

o Ex: (15000 * 35/70) / 2 = 3750.

If Opted for Higher Employees Pension Scheme

 If member death in service, then the Family Pension = (15000 * 20 of years of service / 70) /2
o Ex: (40000 * 15/70) / 2 = 4285.

 If Member death after retirement

o As per above case study, Ex: (40000 * 35/70) / 2 = 60612.

Difference in Case1 : 4285 – 1607 = 2678, but Case 2: 60612 – 3750 = 56862

Suppose at present 10 lakh by employee and 10 lakh by employer have been deposited in EPF
in last 15 years

 In current EPS pension contribution deposited is = 6500*8.33% * no of Months * no of years

o Ex: 6500*8.33% * 12 * 12 + 15000 * 8.33% * 12 * 3 = 123048

Amount deposited in EPF account =1000000+(1000000-123048)=1876952

If we opt to Higher EPS

As per above case study

 Amount deposited in EPS account = 431051

 Amount deposited in EPF account =1000000+(1000000-431051) = 1568949
 Arrear to be transferred from employee EPF fund to EPS fund : 431051-123048=308003
 Note : This is without considering interest

 If there are any surviving children of the deceased member, falling within a definition of family,
they shall be entitled to a monthly children pension in addition to the monthly widow/widower
pension.
 Monthly children pension for each child shall be equal to 25 per cent of the amount admissible
to the widow/widower of the deceased member
 Monthly children pension shall be payable until the child attains the age of 25 Monthly children
pension shall be payable until the child attains the age of 25years
 The monthly children pension shall be admissible to maximum of two children.
Differences for Current EPS and Higher EPS
Particulars Current EPS HIGHER EPS

If BSNL / Any PSU continue to

give us regular increment and Low Pension Very High Pension
IDA our (employee) retirement

If employer not able to give EPF Amount is more and EPS

regular increments and IDA till
retirement or in last 5 years of
our service or VRS / CRS
Pension will be low as per last 5 years
amount is Low Access EPF amount
Wages and EPF amount will also be
would help at the time of
lower than current EPS
Retirement / VRS / CRS

If Government imposes taxes on

EPF amount withdraw at the More Tax to be paid on EPF amount Less Tax to be paid
time of retirement

Less Pension and Less Interest will Higher Pension every month gives
If less EPF Interest Rates
be heavy loss in EPF Amount comfortable fund in our hand.

If Employee and Spouse are alive

Low Pension will effect for daily life Very High Pension will give Happy Life
till 75 years of age

Next generation and our children

above age 25 years will not get any
If employee and Spouse are alive High accumulated EPF amount will
Pension, We have invested lakhs of
till 65 years of age help next generation
rupees in 35 years of service, but not
enjoyed pension for long time

Higher EPF amount could be

Any emergency Requirement withdrawn at the time of Not Possible
Emergency

If our JOB in any organization (Govt PSU / Private) will continue till 58 years, then the EPF higher
pension option will provide higher pension for every member of EPFO, and there is no need to
plan anything else for retirement and every employee can enjoy their own current salary in
present time without any worry for future retirement.

In current Employee Pension Scheme of EPFO, the option need some other retirement planning
like NPS from now onwards to help the existing members too, and if we think with positive
attitude, HIGHER EPS of EPFO’s is very good option for every employee to live happily on
retirement.

Source: https://bsnlteleservices.com/epf-india-higher-pension-eps-retirement