Employee Pension Scheme: Discussion is going on for a long time to remove the limit of pension fund. In the year 2017, it was placed in the board meeting. But, the final decision has not been taken yet.
Employee Pension scheme: There is big news for about 6.5 crore subscribers of Employees’ Provident Fund Organization (EPFO). There can be a big decision regarding the ceiling of your pension fund. The matter is currently in the Supreme Court and the hearing is going on continuously. If the sources of EPFO are to be believed, then the government wants to bring more and more people under the ambit of PF. The matter is about ceiling on basic salary of Rs 15000 for pension. As per the existing rules, there is a limit of Rs 15000 in EPS pension. In such a situation, only a maximum of Rs 1250 can be deposited in the pension fund every month. Overall, if the ceiling is decided, then the ceiling of basic salary will increase directly. It can be done up to Rs 25000.Also Read: Who can take LIC new Arogya Raksha Policy, its benefits, features and eligibility
Understand what is the ceiling of basic salary?
At present, there is a ceiling of Rs 15000 for basic salary for EPF contribution. It can be extended. If the basic salary of a person is Rs 30000, then 12 percent of his contribution on that salary is deposited in the Provident Fund contribution. The same share is also done from the employer’s account. But, the employer’s share is deposited in two places. First- EPF and second- Pension (EPS).Also Read: Bad News: Rules on maturity of ulip have been changed by government
Only 1250 rupees are deposited in pension.
The employer’s 12 percent share will also be deposited on the basic salary of Rs 30000. But, the ceiling of basic salary in pension fund is Rs 15000. Due to the limit, 8.33 percent of the basic salary (15000) is deposited only at Rs 1250. If the limit increases, then this part can be fixed on the limit of Rs 25000. Meaning 2083 rupees will be deposited in the pension fund.Also Read: Great offer from Reliance Jio, Rs 399 recharge plan will be available in just 299; just have to do this work
Understand the current structure in terms of Rs 30000
Basic Salary – Rs 30000
Employee’s contribution – Rs 3600 at the rate of 12%
Employer’s contribution – 12 per cent of 3.67 per cent Rs 2350
Contribution in pension – Rs 1250 at the rate of 8.33 percent
A decision may be taken on increasing the ceiling
According to KE Raghunathan, a trustee of EPFO, at present, the ceiling of basic salary is Rs 15,000, which has been proposed to be increased to Rs 25,000 long ago. Now the Supreme Court has to decide on this issue. If the decision comes on extension, then surely the pension amount will increase. Apart from increasing the pension fund, another advantage is that for those whose salary is above the basic salary ceiling, PF contribution is optional. In such a situation, now more people will be able to come in this circle.Also Read: How LIC SIIP plan work and what is the return on this
6.5 crore people will get benefit
According to Bhanu Pratap Sharma, Retired Enforcement Officer of Employees’ Provident Fund Organization, if this decision is taken, then 6.5 crore EPFO subscribers will get the benefit. The first is that more people will come under its purview and secondly, if the share of the employer increases, then the pension fund (EPS) will also increase. However, it may take time to implement this decision.Also Read: LIC new jeevan akshay pensionplan for life time annuity benefits
Universal Minimum Wage Formula
If sources are to be believed, the members of the Central Board of Trustees (CBT) are in favor of increasing the limit on the pension fund. There are two types of reasoning behind this. First- In the Universal Minimum Wage formula which is to be implemented across the country, the salary can be fixed around Rs 18,000. There is a need to increase the existing salary ceiling in ACE. Through this, it will help to bring more and more people to EPFO and social security will increase.Also Read: Prepaid Smart Meter will be installed in every house, first recharge then use
