Queries about the 8.33% component of EPF

POSTED BY Sambaran Mitra ON April 27, 2011 1:31 pm COMMENTS (6)

The employer makes its own contribution towards EPF. However 8.33% of employer’s contribution is deducted and moved to Pension-fund (also called Employee Pension Scheme – EPS).  In the yearly statement I receive from EPFO, nothing is mentioned about the 8.33% deduction.
What does this 8.33% deduction do for me? Do I get any fixed pension per month? If yes, from when the pension starts? What is the amount?

6 replies on this article “Queries about the 8.33% component of EPF”

  1. Sanchay,
    I have a retirement-planning-excel-sheet which I use for determining my saving per month. The moment I factored in the 3529 pension amount, my saving-per-month reduced by 6100. I was so pleasantly surprised that I could not believe it for a while.

    Any idea how the pension is actually delivered and what paperwork needs to be executed for that? I will bug my HR with the same question. I am sure HR will not understand my enthu for a piddly 3529 pension 2-3 decades down the line. However, they have not seen the 6100 reduction in my excel-sheet either.

  2. Sanchay,

    I had to operate the link with a little workaround. There is a field ‘Wage on 15.11.1995’. I was not working in 1995. The page does not accept a zero in the field. To satisfy the tool, I entered 100 there. On pensionable salary I entered 6500.
    Now it is showing that I stand to get 3529INR as pension. Is it 3529 per month for life?

    1. Sanchay Kulkarni says:

      Yes, this is the maximum amount you will get per month. Very huge amount, I am wondering how we are going to spend it, 3259/- will have a big value after 20-30 years 😀

  3. @Sanchay,

    Thanks for the effort you took to post the reply. However, my query is to find out the quantity of pension I will receive, not how much is being contributed to my pension scheme.

    Secondly, I did not understand your reply. Ideally I should receive X from my employer as contribution to EPF(Employee Provident Fund). However employer pays me X – 6500. It seems 6500 goes to EPS (Employee Pension Scheme). I am unable to correlate this observation with what you wrote above.

    1. Sanchay Kulkarni says:

      You can use the following link to calculate your pension.

      http://www.epfkerala.in/calcpenwb.html

      For EPF and EPS contribution…please elaborate, your understanding with an example, so that its easy to correlate and reply.

  4. Sanchay Kulkarni says:

    Hi Sambaran,

    The 8.33% is only applicable on basic salary upto 6500/Month.

    E.g.
    1)Your basic salary is 5000/Month, contribution to pension fund is 5000*8.33% = 416.50
    2)Your basic salary is 15000/Month,

    15000-6500 = 8500 * 8.33 = 708.05 Goes to EPF
    6500 * 8.33 = 541.45 goes to pension fund.

    Hence, you can treat 541.45 as the cap for pension fund deduction.

    Refer to below link for details.

    http://www.epfindia.nic.in/payments.htm

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