POSTED BY February 28, 2023 COMMENTS (12)ON
Some of the employees recently got a notification from their employers that they have to give a “joint declaration” if they want to opt for higher pension in EPS or not?
Let us try to clear the confusion on this.
So when a person gets a salary, there is a component called basic salary in their salary. 12% of that is contributed by employee end and 12% of that is matched by the employer.
However the 12% part which employer provides is further divided into 8.33% and 3.67%. The 8.33% part actually goes into something called EPS (Employee pension scheme) and rest goes into EPF. However the EPS part is limited to maximum of 8.33% of 15,000 which is considered as the ceiling for basic salary, due to which what happened is that a very small portion of money went into EPS and big part went to EPF.
Over the years, people were dissatisfied that pension portion is not matching their high salary which results to a very tiny pension amount does not makes sense.
Hence recently supreme court has given the order that all the eligible members (who were part of EPFO scheme before 2014) shall get a chance to correct this and some part of their EPF can be transferred to EPS which will result in higher pension.
We have created a small video presentation to make you understand this topic in detail , so please watch the video below.
In the last I just want to include that if you want flexibility and want a bigger corpus then don’t opt for higher pension scheme. But if you are someone looking for fixed and guaranteed and you are comfortable with lower corpus at the time of retirement then you can think of moving into higher pension scheme.
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