The Employees' Provident Fund (EPF) is an important retirement savings plan for private-sector employees in India. It is managed by the Employees' Provident Fund Organization (EPFO) and offers not just a retirement fund but also a pension under the Employee Pension Scheme (EPS).

Many people wonder how much pension they will get after they turn 60. Let’s simplify the rules and explain how this works step by step.

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How PF Contributions Work

Both employees and employers contribute to the EPF every month based on the employee’s basic salary and dearness allowance (DA). Here's the breakdown:

• Employee Contribution: 12% of basic salary + DA goes into the EPF.
• Employer Contribution: 12% of basic salary + DA, divided as:
  • 8.33% for the EPS (Pension Fund)
  • 3.67% for the EPF (Provident Fund)

For instance, if your basic salary is ₹15,000:

• Your Contribution: ₹1,800 (12% of ₹15,000).
• Employer's Contribution: ₹1,800, split as:
  • ₹1,249.50 to EPS (8.33%).
  • ₹550.50 to EPF (3.67%).

This pension amount is calculated from the EPS contribution made during your employment.

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How Is Your Pension Calculated?

The pension amount depends on your pensionable salary and the number of years you have worked in an organization covered by EPFO. Here’s the formula:

Pension Amount = Pensionable Salary × Years of Service
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What Do These Terms Mean?

• Pensionable Salary: The average of your last 60 months’ basic salary + DA. The maximum considered is ₹15,000 per month.
• Years of Service: The total years you contributed to the EPS fund, rounded down to the nearest whole year.

Example Calculation
If your pensionable salary is ₹15,000 and you worked for 30 years:

So, after 60, you’ll receive ₹6,428 as your monthly pension.

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Eligibility for EPS Pension

To qualify for the EPS pension:

1. Minimum Service: You must complete at least 10 years of service.
2. Age: Pension benefits typically start after 58 years. If you work until 60, you’ll begin receiving the pension after you retire.

If you’ve worked for less than 10 years, you won’t qualify for a monthly pension. Instead, you can withdraw the EPS amount as a lump sum.

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Important Rules About EPFO Pension

1. Maximum Salary Limit: EPS only considers a salary up to ₹15,000 per month for pension calculations. Higher salaries will not increase your pension.
2. Pension for Early Retirement: You can start your pension at 50, but it will be reduced by 4% for every year before 58.
3. No EPS Contribution After 58: Employers stop contributing to EPS after you turn 58, though PF contributions can continue.
4. Survivor Pension: If the account holder passes away, their spouse or family member can receive the pension.

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