Private Jobs- Now private job holders will also get pensions, and know about the new rules of the government.

If you are a job holder, then you must be aware of the Employees Provident Fund Organization (EPFO) scheme run by the Government of India, under which it provides many facilities to individuals working in the private sector. A major benefit under this scheme is the pension given to the employees working in the private sector. Let's know the complete details about it-

What is EPFO ​​​​and how does it work?

Under the EPFO ​​​​scheme, private sector companies deposit a part of their employee's salary in the Employees Provident Fund (EPF). Every month, companies deduct a percentage amount from the salary of the employees and deposit it in their PF account. This contribution includes 12% of the basic salary and dearness allowance (DA).

Out of this 12%, 8.33% is allocated to the employee's pension fund, and the remaining 3.67% is deposited in their PF account.

The employee can use the accumulated PF amount when he reaches the age of 58 years.

How is pension calculated?

The pension that an employee receives from the EPFO ​​is not a direct withdrawal from the PF account. Instead, it is calculated based on a certain formula, which takes into account the employee's pensionable salary and years of service. The formula to determine pension is:

Pension = (Pensionable Salary x Pensionable Service) / 70

In this formula:

Pensionable salary refers to the salary on which pension contributions were made.

Pensionable service is the number of years in which the employee worked and contributed to the EPFO ​​scheme.

Example of EPF and pension deduction

For an employee with a monthly salary of ₹15,000, here is how the deduction works:

8.33% of ₹15,000 is ₹1,250, which is transferred to the pension fund every month.

If this employee works for 20 continuous years, the pension will be calculated as follows:

Pension = ₹15,000 × 20 / 70 = ₹4,286 per month.

This formula allows employees to estimate their pension based on their salary and years of service.

Eligibility for pension

The employee must have a minimum monthly salary of ₹15,000.

They must have contributed to the EPFO ​​for at least 10 continuous years.

When the employee turns 58, he starts receiving his pension.