By Admin 
EPFO Pension Calculation: Lakhs of employees in the country deposit a part of their salary in EPFO every month. Especially for those working in the private sector, this is a great means of retirement planning. 12 percent of the employees’ salary goes into their PF.
A part of which is deposited in the pension scheme i.e. EPS. After retirement, you get this amount as monthly pension. But the real question is how much pension you will get and how it is calculated. Let us tell you its complete calculation.
When do you get pension?
Every month, 12 percent of the employee’s basic salary and DA is deposited in PF. Out of this, 8.33 percent is transferred to the Employee Pension Scheme. Whereas 3.67 percent remains in the PF account. To get pension, minimum 10 years of service is required. According to the rules, the normal start of pension is after the age of 58 years. The number of years you contribute during your job. That is considered service for your pension. On this basis further monthly pension is decided.
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What is the pension formula?
EPFO has made a clear formula to decide pension. The formula for calculating monthly pension is: Salary for pension X Service for pension / 70. Here salary for pension means your average salary for the last 60 months. That means, the average salary of the five years before retirement is taken. Your total years of service for pension are taken into account. Provided that at least 10 years have been completed. The monthly pension of every employee is decided by this calculation.
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How will you do the calculations?
Suppose the salary of an employee for pension is Rs 15000 and he has contributed for 10 years. According to the formula it will be 15000X10/70. In such a situation, the monthly pension will be around Rs 2143. If your salary is high or service tenure is 20 or 25 years. So pension will also increase in the same ratio. That means, the longer the contribution and the higher the salary, the higher will be the monthly pension. It is very important to understand this formula while planning retirement.
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