The Employees’ Provident Fund Organization (EPFO) extended the deadline to choose a higher pension until May 3. This option is available for workers who began working before September 1, 2014, and continued working on or after that date but were unable to activate their joint option under the Employees’ Pension Plan. In the following paragraphs, you can find detailed information about the EPFO Higher Pension Scheme, including its highlights, benefits, eligibility criteria, contributions under EPS, considerations to make before choosing a higher pension, steps to apply for an EPFO Higher Pension, and much more.
- 0.1 EPFO Higher Pension Scheme 2023
- 0.2 EPFO Higher Pension Scheme Last Date Extended
- 0.3 Benefits of EPFO Higher Pension Scheme
- 0.4 Eligibility Criteria for EPFO Higher Pension Scheme
- 0.5 EPFO Higher Pension Scheme Contribution under EPS
- 0.6 EPFO Higher Pension Scheme Application Deadline
- 0.7 Considerations to make before Choosing a Higher Pension
- 0.8 Steps to Apply for an EPFO Higher Pension Scheme 2023
- 1 FAQ About EPFO Higher Pension ?
EPFO Higher Pension Scheme 2023
The EPF, or Employees Provident Fund, is a program where 12% of an employee’s basic pay (plus any permanent components like DA) is deducted every month, matched by the employer, with annual interest being stated, and a lump sum payment given upon retirement. While the employer’s 8.33% contribution may occasionally go into the Employee’s Pension Plan or EPS, a separate program for guaranteed pension payouts after retirement, the employee’s contribution of 12% goes entirely into their EPF account. In 2014,
the government introduced changes to the program, including a maximum salary of Rs. 15,000 to calculate the 8.33% EPS contribution, replacing the previous salary cap of Rs. 6,500. However, companies were allowed to contribute more based on actual pay. Additionally, employees hired after September 1, 2014, earning more than Rs. 15,000 per month, were no longer eligible for EPS benefits, which was met with resistance from labor unions. They successfully sued the EPFO in high courts, leading to the Supreme Court hearing the EPFO’s appeal and issuing a decision in November 2022.
EPFO Higher Pension Scheme Last Date Extended
On March 13th, 2023, the Employees’ Provident Fund Organization (EPFO) announced an extension to the deadline for submitting requests for higher pensions under the Employees’ Pension Scheme (EPS) until May 3rd. Retirees who opted for the higher pension available under the Employees’ Pension Plan of 1995 (EPS 95) before September 1, 2014, now have until May 3, 2023, to submit their requests.
The Supreme Court ruled that employees who retired before September 1, 2014, and exercised the option under paragraph 11(3) are entitled to a pension based on increased salaries. To qualify for a higher pension, employees need to pay more into the EPS, with the company contribution capped at 8.33% of 15,000 rupees per month. Employees can choose to contribute up to 8.33% of their salary (or 1,250 rupees per month) to increase their pension payout upon retirement. Field offices were instructed of the deadline extension via circulars dated December 29th, 2022 and January 5th, 2023.
Benefits of EPFO Higher Pension Scheme
Below are some of the primary advantages of the EPFO Higher Pension Scheme:
- A higher pension means a larger monthly payout during your retirement years, which can be particularly beneficial if you do not have any other sources of income
- Your pension amount is fixed and will not be impacted by market fluctuations since it is calculated based on your years of service and average salary
- By choosing the EPFO Higher Pension Scheme, you can ensure a more comfortable retirement and have greater financial security in your golden years.
Eligibility Criteria for EPFO Higher Pension Scheme
To be eligible for the EPFO Higher Pension Scheme, you must meet the following criteria:
- You must be a member of the Employees’ Provident Fund Organization (EPFO)
- You must have been a member of the Employees’ Pension Plan (EPS) for a minimum of 10 years
- Depending on when you joined the EPS, you must be either 50 or 58 years old to qualify for a higher pension.
EPFO Higher Pension Scheme Contribution under EPS
Following the 2014 amendment, there were issues regarding pension contributions on higher salaries, as several employees reported that their joint option to contribute to the pension based on their higher income amount had been rejected by the EPFO. As a result, employers were contributing 8.33% of the pension based on the employees’ actual pay, while the pension computation used a pensionable salary of Rs. 15,000 instead. Many employees filed cases in High Courts to obtain higher pensions based on their actual wage contributions without filing the joint option. The case was later presented to the Supreme Court, which made a ruling on the matter.
EPFO Higher Pension Scheme Application Deadline
Individuals have a deadline of March 3, 2023, to apply for a higher pension under the Employees’ Pension Plan (EPS). From September 1, 2014, members of the Employees’ Provident Fund Organization (EPFO) are now able to choose a higher pension based on their actual basic wages. The EPFO has issued this directive to allow senior members to opt for larger pensions and contribute more to the EPS at 8.33 percent, instead of being limited to a monthly cap of Rs 15,000 in pensionable salary.
Considerations to make before Choosing a Higher Pension
Before opting for a Higher Pension under the EPS, it’s important to consider several factors. These include:
- Cost: Choosing a higher pension means making additional voluntary contributions to the EPS. While employers are limited to contributing 8.33% of Rs 15,000 per month, you can choose to contribute up to 8.33% of your actual pay (up to Rs 1,250 per month). So, if your monthly salary exceeds Rs. 15,000, you’ll need to make extra contributions to receive a higher pension
- Tax implications: While the lump sum from the provident fund is tax-free, the pension amount is taxable. If you have additional sources of income and are in a higher tax bracket, your pension amount will be reduced due to taxes
- Lump sum payment: It’s important to note that choosing a higher pension will result in a smaller lump sum payment. Therefore, this option is recommended only if you prefer a higher pension after retirement to a larger lump sum payment
- Death benefits: If the EPS subscriber passes away, their legal heirs and nominees are only eligible to receive 50% of the qualifying pension that the subscriber would have received. Therefore, if the subscriber passes away earlier than expected, the family could suffer a significant financial loss compared to the higher lump sum payment option
- Long-term planning: Consider your long-term retirement plans before deciding on a higher EPS pension. If you have other retirement income options, such as personal pensions or investments, you may not require a higher EPS pension. However, if you have no other sources of retirement income, a higher EPS pension can be advantageous. Your financial situation and retirement goals will determine whether a higher EPS pension is appropriate. It may be helpful to consult a financial advisor to make an informed decision.
Steps to Apply for an EPFO Higher Pension Scheme 2023
To apply for an EPFO Higher Pension Scheme, the employee needs to follow the below-given steps:
- First of all, go to the official website of the EPFO Unified Member portal
- The homepage of the website will open on the screen
- To access the Pension on Higher Salary: Exercise of Joint Option under para 11(3) and para 11(4) of EPS-1995 link, click on the “Important Links” section. Once the new page loads, you will be presented with two options
- Application form for validation of joint options” and “Application form for joint options.” Select the latter option to proceed
- On the next page, you will be presented with two options depending on your employment status. If you left your job before 01.09.2014 and executed joint option, select
- Validation of joint options who retired before 01.09.2014 and executed joint option.” If you retired after 01.09.2014
- select Exercise of joint option for employees who were in service before 01.09.2014 and continued to be in service 01.09.2014 but were unable to exercise the joint option.
- Once you have selected the appropriate option, an application form will appear on the screen. Fill in all the necessary details, and then click on the “Submit” button. The EPFO will digitally register each application and provide the applicant with a receipt number
- The EPFO will then send the applications to the relevant employers,
- who will check them through an e-signature or digital signature before continuing with the application process
- All applications will be converted into e-files by the RPFC.
- After examining the documents, the dealing assistant will forward the matter to the section account officer or supervisor
- If any discrepancies are noted, the concerned account officer or supervisor will send them to the Assistant Provident Fund Commissioners (APFC)/RPFC-II.
- The APFC/RPFC-II will review the application and notify the applicants of the decision regarding their higher pension via email, mail, phone, or SMS.
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FAQ About EPFO Higher Pension ?
The Employees’ Provident Fund Organisation (EPFO) has extended the deadline for higher pension for retired employees to May 3, 2023 from March 3, 2023. The extension has come after EPFO extended the deadline for existing employees – working on September 1, 2014 and continued to work after – to May 3, 2023.
When you have attained 58 years of age and completed 10 years of service. In this case, you are eligible for 100% of the pension amount, paid out on a monthly basis.
We are pleased to announce that the cost-of-living adjustment (COLA) for 2023 is 6.3% for retired members who retired from the PSPP and their survivors
Linkage Of full pension with 33 years of qualifying service shall be dispensed with. Once a Government servant has rendered the minimum qualifying service of twenty years, pension shall be paid at 50% of the emolument or average emoluments received during the last 10 months, whichever is more beneficial to him.