The Employees’ Provident Fund Organisation (EPFO) has finally released an Excel-based calculator for employees who want to opt for a higher pension from the Employees’ Pension Scheme (EPS).
The calculator helps an employee to estimate the amount of money he/she has to pay now if they opt for a higher EPS pension before the deadline of July 11, 2023. To be eligible for a higher pension on the basis of actual salary, the contribution in EPS should also be done on the basis of actual salary not only in future but also in the past. As the employees are opting for a higher pension now, they are required to pay the difference between the amount already deducted towards EPS and the higher deduction on the basis of actual salary since it exceeded the wage ceiling limit or from the date of joining the EPS scheme – whichever is later.
How to use EPFO’s Excel calculator
Before using this calculator, an employee must keep all his salary slips (from the date of joining the EPS scheme) handy. This is because the calculator asks an employee to manually enter his/her wage details on a monthly basis. Under the EPF laws, basic salary and dearness allowance (if any), are considered as ‘salary’ for the purpose of monthly contributions to the EPF and EPS accounts.
Hence, from your salary slips, an employee must enter the basic salary details manually in the Excel calculator. Once the details are entered, the calculator automatically makes other calculations, i.e., additional 1.16% contributions from September 1, 2014, on wage above Rs 15000 and interest accrued on missing EPS contributions etc.
Here we have taken an example of how EPFO’s Excel calculator for higher pension works. Suppose you joined the job and became a member of EPF and EPS in June 2010 with a basic salary of Rs 10,000 per month. Further, it is assumed that your basic salary is hiked by 15% every financial year. As the basic salary is hiked every year, the contribution to the EPF and EPS accounts will also vary. Till August 2014, the wage ceiling in the EPF scheme was Rs 6,500. Hence, from June 2010 to August 2014, the contribution made to the EPS account will be 8.33% of the actual basic salary instead of the wage ceiling limit (Rs 6,500).
Since 8.33% of the prevailing wage ceiling of Rs 6500 would have already been contributed, therefore, once the wage details are entered, it will show the additional contributions and accrued interest till March 31, 2023, that is payable in the EPS account…Read More
Source By: economictimes
