EPS Calculation: How much EPS pension will you receive after 20 years of service?
For every salaried individual, the Employees' Provident Fund (EPF) and the Employees' Pension Scheme (EPS) are primary means of securing the future. 12% of your basic salary is deposited into your PF account, and your company (employer) makes an equal contribution. However, out of the company's 12% share, 8.33% goes directly into your pension fund (EPS).
Employees often wonder how much pension they will receive upon retirement after working for several years. Today, we will explain how the pension is calculated under EPFO rules for an employee who has completed 20 years of service.
What is the '2-year bonus' rule for 20 years of service?
According to EPS (1995) rules, it is mandatory for an employee to complete at least 10 years of 'pensionable service' to become eligible for a pension. Additionally, a significant EPFO rule states that if an employee completes 20 years or more of service, an extra weightage (bonus) of 2 years is added to their total service period.
Here is the pension calculation:
According to the EPFO, the formula for calculating the EPS pension is:
Monthly Pension = (Pensionable Salary × Pensionable Service) ÷ 70
* Pensionable Salary: Based on the average salary of the last 60 months.
* Pensionable Service: The total number of years of contribution to the EPS.
How much pension will be received based on 20 years of service?
Let us assume an employee has a pensionable salary of ₹15,000 and has completed 20 years of service. Total service: 20 years
Bonus service (Bonus Years): 2 years (weightage for completing 20 years)
Pensionable service (Total Pensionable Service): 20 + 2 = 22 years
Salary ceiling: ₹15,000
Now, applying these values to the formula:
* Pension = (15,000 x 22) / 70
* Pension = 3,30,000 / 70
* Pension = ₹4,714.28
This means that if you have contributed to an EPF account for a total of 20 years during your career, you will receive a guaranteed lifelong pension of approximately ₹4,714 per month upon retiring at the age of 58.
Disclaimer: This content has been sourced and edited from Dainik Jagran. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.
