Summary of this article
EPFO restores higher EPS pension for pre-2014 opt-in employees.
Pensionable salary cap stays ₹15K; higher only for eligible group.
82L+ EPS pensioners; min ₹1K, max ₹7.5K unchanged currently.
Employer contrib: 8.33% of 12% PF goes to EPS corpus only.
Post-2014 joiners capped; no new higher pension opt available.
The Employees' Provident Fund Organisation (EPFO) has reinstated the higher pension option for eligible employees, allowing them to contribute a higher amount to the EPS pension. However, this reinstatement of the higher pension option is limited to a specific group of employees who had opted for higher pension contributions before the scheme was discontinued in 2014, as reported by the Economic Times, citing the Times of India. Since September 2014, the pensionable salary cap under the Employee Pension Scheme, 1995 (EPS), is Rs 15,000. Employees, even if earning a higher salary (Basic + Dearness Allowance), are not permitted to contribute a higher amount towards their pension.
What Is The Change?
Per the report, this is only the reinstatement of the previous provision. The restoration is applicable only to those employees who have opted for a higher pension and have exercised their option already. So, only those subscribers who were allowed to contribute towards a higher pension based on their actual salary and dearness allowance instead of the Rs 15,000 salary capping are eligible for it after reinstatement. All other subscribers can contribute only on the first Rs 15,000 of salary (basic and DA).
In a nutshell, restoration is not for all, but only for eligible employees (those who have opted for it and exercised their option).
EPS-95 Pensioners And Corpus
There are over 82 lakh EPS-95 pensioners at present. EPS, as one of the three schemes (Employees Provident Fund -EPF, EPS, and Employees Deposit Linked Insurance-EDLI), offered by the EPFO, to which employers contribute 8.33 per cent of their total 12 per cent of their contribution.
This is a defined contribution – defined benefit scheme. The EPS corpus is made of the employers’ 8.33 per cent contribution of the salary / wages, and 1.16 per cent contribution by the government on the restricted salary of Rs 15,000 per month.
Minimum And Maximum Pension For EPS Subscribers
When a subscriber retires, the pension is paid from this fund. The minimum pension under the EPS-95 is Rs 1,000. While many employee organisations and trade unions have been raising demands for increasing the minimum pension, it remains unchanged at Rs 1,000 per month. The maximum pension under EPS-95 is also fixed at Rs 7,500.
Notably, employees who started subscription to the EPFO after September 1, 2014, are not allowed to opt for pension contribution based on their actual salary, and thus, their pension remains limited to a maximum of Rs 7,500 per month.
Before September 1, 2024, a higher contribution towards pension was allowed, but from this date onwards, the contribution is capped, and so is the pension amount.
