This article provides the information higher pension EPFO and addresses various aspects, including documentation requirements and the calculation of pensionable salary.
The Employees Provident Fund Organisation (EPFO) has recently released a revised set of Frequently Asked Questions (FAQs) to guide individuals through the process of opting for higher pensions following the Supreme Court ruling in November 2022.
DOCUMENTATION CLARITY ON HIGHER PENSION EPFO
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 Extended Deadline for Employers
While the deadline for employees opting for higher pensions concluded on July 11, 2023, employers have an extended deadline until December 31, 2023.
This extension allows ample time for employers to complete the necessary formalities.
Joint Request Process
The FAQs offer detailed insights into the documentation required from both employees and employers.
To make a joint request for higher pensions, employees and employers must follow a streamlined process outlined in the FAQs. Importantly, the FAQs emphasize that a higher pension application will not be rejected solely due to the employee’s failure to obtain necessary permissions.
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Regional Provident Fund Commissioner’s Role
To confirm that contributions were made based on a higher salary, the Regional Provident Fund Commissioner is mandated to collect details from the employer.
Even if documentary proofs are not initially submitted with an online application for joint option validation, the Commissioner cannot reject the application solely due to a lack of documents.
Instead, required documents will be obtained from the employer to validate contributions for a higher pension and the employee’s eligibility.
PENSIONABLE SALARY CALCULATION
Based on Pension Commencement Date
The calculation of the pensionable salary hinges on the pension commencement date. For pensions commencing before September 1, 2014, the computation will rely on the 12 months’ average salary during the contributory 12 months preceding the exit date from the pension fund.
In contrast, for pensions commencing on or after September 1, 2014, the pensionable salary will be calculated based on the average monthly pay during the 60 months of contributory service preceding the date of exit from the scheme.
 Future Retirement Considerations
For individuals considering retirement in the future, the FAQs clarify that the pension will be calculated based on the provisions existing at the time of the pension commencement date.
This forward-looking approach provides individuals with a clear understanding of how their pensions will be calculated under evolving circumstances.
 ARREARS PAYMENT PROCESS
Compliance with Income Tax Provisions
The FAQs address the critical issue of arrears of pension and outline that any arrears will be paid to pensioners through the existing process.
To comply with income tax provisions related to Tax Deducted at Source (TDS), the EPFO’s updated FAQ ensures that the arrears payment process adheres to the necessary legal requirements.
UNDERSTANDING THE EMPLOYEES PENSION SCHEME (EPS) OF EPFO
The Employees’ Pension Scheme, commonly known as EPS, constitutes a vital component of the broader Employee’s Provident Fund (EPF).
Initially, anyone who was a member of EPF automatically became a part of EPS until August 31, 2014. However, a significant amendment was introduced in September 2014, incorporating a basic salary limit for EPS eligibility.
Presently, an individual becomes a member of EPS if they are part of the EPF scheme, provided their basic salary does not exceed Rs 15,000 per month.
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CONTRIBUTIONS AND MECHANISM
EPS contributions are derived from the employer’s contribution to the EPF. Out of the employer’s 12% contribution from the basic pay, 8.67% is directed towards the EPS.
It’s crucial to note that this 8.67% is calculated based on the wage ceiling limit, currently set at Rs 15,000. Consequently, Rs 1,250 (8.67% of Rs 15,000) is deposited monthly into the EPS account from the employer’s contribution.
The remaining portion of the employer’s contribution finds its way into the employee’s EPF account.
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PENSION ELIGIBILITY AND CALCULATION
Under the EPS framework, an individual becomes eligible for a monthly pension after attaining the age of 58. The pension amount is calculated using a specific formula outlined by the EPF law.
This formula takes into account various factors, ensuring a systematic and fair calculation of the pension amount.
EPS is intricately linked with the EPF and plays a pivotal role in providing financial security to employees during their post-retirement years.
The recent amendment in 2014, introducing a basic salary limit, has streamlined the membership criteria.
Through the mechanism of employer contributions, the EPS ensures that a portion is dedicated to building a pension corpus for employees, reinforcing the goal of financial well-being in their later years.
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CONCLUSION ON HIGHER EPS PENSION
As the deadline for employers’ formalities draws to a close on December 31, 2023, the revised FAQs by EPFO provide indispensable guidance for individuals navigating the process of opting for higher pensions under EPS’95.
This comprehensive resource not only offers clarity on documentation requirements but also outlines the steps for a joint request process, pensionable salary calculation, and the payment process for any arrears.
It serves as a valuable reference for both employees and employers involved in the higher EPS pension initiative.