Home Personal Finance How to get a higher pension in current EPFO ruling explained

How to get a higher pension in current EPFO ruling explained

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The Employee Provident Fund Organization (EPFO) has devised a procedure for contributions towards higher EPS pensions. Those who choose the higher pension will no longer have to contribute her 1.16% of her salary above the wage cap.

According to the Labor Department, an additional contribution of 1.16 percent of basic wages for participants who opt for a higher pension will be controlled from employer contributions.

Calculation of the Employees’ Pension Plan

Currently, the government imposes a maximum of 1.16% of basic wages. ¥15,000 (standard base salary) will be subsidized as a contribution to the Employees’ Pension System (EPS). The employer contributes 12% of his base wage to his EPFO-run social security scheme. Of the 12% employer contributions, 8.33% goes into EPS and the remaining 3.67% goes into employee provident funds.

1.16% additional contribution rule for higher EPS

All EPFO ​​members choosing to contribute to an actual base wage higher than the threshold amount ¥If you pay 15,000 monthly to receive a higher pension, you do not need to contribute this additional 1.16% to EPS.

The retirement fund agency EPFO ​​has extended the date of submission of applications to opt for a higher pension until 26 June 2023.

According to the statement, in order to provide greater opportunities and allow all eligible persons to submit their applications, the application submission timeline will now be June 26, 2023.

Should I choose a higher pension under the Employees’ Pension Plan?

According to Sebi Registered Investment Adviser (RIA) Ravi Saraogi, choosing a higher pension will ease the burden of making a thorough retirement plan. However, not opting for a higher pension leaves him with a large EPF corpus and the responsibility of designing an effective retirement plan. “We advise individuals who are financially savvy or working with competent advisors not to choose a higher annuity. However, if planning for retirement seems like a daunting task, we recommend taking advantage of the higher pensions offered by EPS,” said Ravi Saraogi.

Higher EPFO ​​Pensions: Reasons to Avoid

Amit Gupta, MD, SAG Infotech said choosing a higher EPS pension could jeopardize early retirement plans. “For individuals wishing to retire early, it may not be wise to apply for a higher EPFO ​​pension, as entitlement to the EPS pension is only granted after 10 years of employment and age 58. The person will receive a pension from the EPS on a formula basis and receive a tax-free lump sum from the EPF account upon retirement,” said Amit Gupta.

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