Will you get Rs 12.5K pension under new wage ceiling?

The government recently introduced a new Employees' Provident Fund (EPF) wage ceiling of Rs 25,000, which came into effect on Thursday. This higher wage ceiling will allow employees to earn a higher monthly EPS pension at retirement, as it is calculated based on the pensionable salary and the number of years of service in which contributions were made. The pensionable salary is determined by the average salary drawn in the last 60 months at the time of exiting the EPF fund.

The new wage ceiling will benefit employees who have been contributing to the EPS fund for at least 5 years with a basic salary of Rs 25,000 or more. However, those with a basic salary between Rs 15,000 and Rs 25,000 will also be eligible for increased pension benefits.

To estimate your monthly EPS pension under the new wage ceiling, you need to consider your pensionable service years and the average basic salary before exiting the EPF fund. For example, if you have 33 years of pensionable service and the average basic salary is equal to or more than Rs 25,000, your estimated monthly EPS pension would be Rs 12,500.

The increased wage ceiling will result in higher EPS pension amounts compared to the previous Rs 15,000 limit. For instance, with 33 years of service and a wage ceiling of Rs 25,000, the pension would be Rs 12,500, which is Rs 5,000 more than the pension under the old wage ceiling.

Employees who are retiring within the next 5 years will receive partial benefits from the higher EPS pension under the new wage ceiling, as their benefit will be linked to the number of months they contribute under the new wage limit. However, they must complete at least 10 years of service with EPS contributions to be eligible for the pension.