If you work in the private sector, then the Supreme Court’s recent decision is going to be of great benefit to you. The Supreme Court has cleared the way for a huge increase in the pension of all the employees of the private sector. The decision of the court will increase the pension of private sector employees in multiples. But there must have been a question in your mind about how it would be and what is its math?
In fact, the Supreme Court upheld the Kerala High Court verdict rejecting the EPFO petition in the pension case. Kerala High Court has ordered to pay pension according to employee’s full salary. In such a situation, now private sector employees will get more pension.
The Kerala High Court said in an order to the EPFO that employees who retire should get pension on the basis of their last salary. At present, pension is calculated based on the limit of basic salary of Rs 15,000 from EPFO.
EPFO challenged the Kerala High Court’s verdict in the Supreme Court. But the Supreme Court upheld the High Court’s verdict. Now that the change in the formula of pension will be seen and its direct benefit will be to private sector employees.
According to the rules of the EPFO, 12 percent of the basic income of the private employee was invested in the PF. At the same time, 12 per cent was also invested by the employer, out of which 8.33 per cent goes to the Employees’ Pension Scheme (EPS). Though the basic salary was more than 15,000 per month, the EPS share was limited to 8.33 percent. Now after the order of the Supreme Court, the pension will be paid according to the entire salary.
We tell you that if anyone’s salary is 50 thousand rupees per month then how much benefit will you get after the order of the court? In fact, under a particular formula, the amount of PF is deducted from salary and then the amount of pension for PF is determined.
Pension Formula 33 Years Job: (Year of Job + 2 / 70x Final Salary)
If someone’s salary is 50 thousand rupees a month then how much pension will it get from this formula? (Formula: Job 33 years + 2 = 35/70 x 50000 = 25000 rupees) However, it has given an example of a job of up to 33 years of the employee. That is, after the order of the court, the employee gets a pension of 25,000 rupees per month, whereas only Rs. 5180 was received before the order.
Pension Formula on 30 Years Job: (Year of Job + 2 / 70x Final Salary).
If someone’s salary is 50 thousand rupees a month then how much will he get from this rule? (Formula: 30 years of job + 2 = 32/70 x 50000 = 22,857 rupees) that means a pension of Rs 22,857 after the court order, whereas before the order 4525 rupees got pension only.
Pension Formula on 25 Years Job: (Year of Job + 2 / 70x Final Salary).
If someone’s salary is 50 thousand rupees a month then how much will he get from this rule? (Formula: 25 years + 2 = 27/70 x 50000 = Rs 19,225) after the court order, the employee gets a pension of Rs. 19,225 per month, whereas only Rs. 3425 was received before the order.
Pension Formula on 20 Years Job: (Year of Job + 2/70 x Final Salary).
If someone’s salary is 50 thousand rupees a month then how much will he get from this rule? (Formula: Job 20 years + 2 = 22/70 x 50000 = 14,285 rupees). That is, after the order of the court, 14,285 rupees pension will be received every month, whereas only 2100 rupees could get the pension before the order.
Now the question arises in your mind that if the employee with a salary of Rs 50,000 will get 25 thousand rupees every month in the pension, then where will the money come from? According to the information so far, now 12 percent of the entire salary will be deducted for PF, which will increase the amount of investment for the pension. According to the new rules, the employee will have to complete the services in the private sector for a minimum of 10 years to take advantage of the pension.
For example, an employee’s salary is 50 thousand rupees, and according to the new rule, 12 percent of his salary ie 6 thousand rupees will be deducted for the EPFO every month, and The same amount will be deposited in the provident fund account of the employee every month from the employer.
The Central Government started Employee Pension Scheme (EPS) in 1995. Under this, the company put 8.33 per cent of basic salary of employees up to 6,500 (maximum Rs 541 per month) in the pension scheme. But on September 1, 2014, EPFO changed it to 8.33 per cent of the basic salary of 15,000 (maximum Rs 1,250 per month).