For a long time, the working class has demanded that the minimum pension under the 'Pension Scheme-1995' be increased. However, the case is currently pending at the Supreme Court. Until then, good news for the working class is on the way. EPFO is aiming to introduce a new pension plan for improved fixed pensions, according to information gathered by partner channel Zee Business. The employee would have the ability to select a fixed amount of pension under the new initiative. The good news is that self-employed people will be allowed to register alongside salaried workers.
The amount you must contribute to your pension will be determined by your income and estimated remaining time. EPFO is reportedly preparing to introduce a new fixed pension programme, according to sources. The amount of a fixed pension is determined by the amount of money contributed. You will also be required to make contributions based on the quantity of pension you desire, as per a Zee News Hindi report.
EPFO is now planning for the Employee Pension Scheme-1995 option. The amount in EPS that is now available is tax-free. However, the minimum pension under it is quite low, and shareholders have frequently urged that it be increased. At the moment, the highest monthly donation limit is Rs 1250. In such a case, EPFO is ready to offer an option to working individuals in order to provide them with additional pension.
EPS's present rule
Individuals who join the Employee Provident Fund (EPF) automatically join the EPS. According to the rules, the employee contributes 12% of his or her basic salary to the PF. The identical portion is placed in the EPF on behalf of the employer in the employee's name. The EPS, on the other hand, receives 8.33 percent of the employer's payment. That is, EPS equals 8.33% of the base salary. However, the highest pensionable salary is Rs 15,000 per month. In this case, a maximum of Rs 1250 per month can be placed in the pension fund.
How to Calculate Out Your Pension
Monthly Pension = (Pensionable Salary x Number of Years Contribution in EPS Account) /70 = EPS Calculation Formula
If a person's monthly wage (average of the previous 5 years) is Rs 15,000 and he has worked for 30 years, he will receive a monthly pension of (15,000 X 30) / 70 = 6428 rupees.
How much of a pension would be available if the limits were removed?
If the 15-thousand-rupee limit is replaced with a 30-thousand-rupee limit, you will receive a pension based on the formula (30,000 X 30) / 70 = Rs 12,857 a month.
Good News for Self-Employed Individuals
In EPS, only the salaried class has the option of receiving a pension at the moment. However, if the new law is enacted, self-employed people will be eligible to register as well. In this instance, the amount of the pension will be determined by the self-employed person's contribution. That is, you will have to contribute according on the quantity of pension you desire.
Let us inform you that the amount of EPS is now tax-free. The present EPS-95 pension scheme will continue after the new rule is implemented. That is to say, the government is preparing to provide the EPS option. People can contribute in order to receive a larger pension in the future.
