New Delhi: The Employees’ Provident Fund (EPF) is one of the earliest social security schemes for employees the principal objective of which is to create a pool of funds for the employee to provide a degree of financial security in life after retirement. The fund is managed by the Employees’ Provident Fund Organisation (EPFO) and it also pays a pension to the employee. One gets the maximum pension when one reaches the age of superannuation at 58 or 60 years.
What is the starting age for regular oesion under EPF
An EMPFO subscirber can also opt for an earlier pension. The eligibility criteria are that one should be at least 58 years of age. The EPFO assures that employees receive a pension after they reach the age of 58. This benefit is available to both existing and new EPF members.
The pension scheme under EPFO was introduced in 1995 with the specific objective of providing a stream of regular cash flows to the employee after he/she attains the age of 58.
Anyone who has crossed the age of 50 can opt for an early pension from the EPFO. One can fill out form 10D to claim early pension. It can be done online.
However, there is a rider. For every year that you claim pension early, the amount of pension will decline by about 4%. The reverse is also true. If an employee decides to take pension from the age of 60 (and not from 58) he/she would get 4% more. The benefit of pension is available to any employee covered by the EPFO.
EPFO pension formula
The formula for calculating the EPF higher pension is: Monthly pension amount = (Pensionable salary X pensionable service)/70.
In this formula “pensionable salary” refers to the average basic salary of the concerned employee for 5 years from the date of retirement.
Similarly “pensionable service” indicates the time period for which an employee was making contributions to the Employee Provident Fund and Employee Pension Scheme account.
Completion of 10 years of service is essential for getting a pension.
Employees’ Provident Fund generates a pension apart from a lump sum payment at the end of working life. There are provisions for an employee to get the pension early. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
