Good news for private employees! Now you may get more money after retirement; here's how

In a massive cheer for salaried individuals in the private sector, the Supreme Court on Friday paved way for a higher pension by scrapping a special leave petition.

By : ABP News Bureau | Updated at : 02 Apr 2019 06:02 PM (IST)

EPFO pension for private employees: All salaried individual to get more money after retirement; here's how Good news for private employees! Now you may get more money after retirement; here's how

We find no merit in the special leave petition, SC said. (Image: PTI)

Now, all employees will get a pension on their full salary instead of the Rs 15,000 cap

The pensions will increase but the PF corpus will be reduced

EPS was introduced by the government in 1995 for the organised sector employees

New Delhi: In a massive cheer for salaried individuals in the private sector, the Supreme Court on Friday paved way for a higher pension by scrapping a special leave petition filed by the Employees Provident Fund Organisation (EPFO) against the Kerala High Court judgment. The HC had asked EPFO to give pension to all the retiring employees on the basis of their full salary instead of capping maximum pensionable salary to Rs 15,000 per month. Now, here’s what the Supreme Court in its judgment said – “We find no merit in the special leave petition. The same is, accordingly, dismissed.” After this decision, all employees will get a pension on their full salary instead of the Rs 15,000 cap after their retirement! However, the ruling also highlights that the pensions will increase but the PF corpus will be reduced as more contribution will go to Employees Pension Scheme and not PF. EPS was introduced by the government in 1995 for the organised sector employees. The scheme applies on all employees under the EPF scheme and people who are covered under EPS receive a pension on a permanent basis. All employees with monthly income along with DA of Rs 15,000 or lesser must enroll in this scheme. In 2014, the government had issued a notification bringing out some major changes in the way Employees’ Pension Scheme 1995 works. Under this, the monthly pensionable wage ceiling for the Employees’ Pension Scheme 1995 was enhanced from Rs 6500 to Rs 15000. The mode of calculating the average pensionable wage was also changed. The amendment added that the pension on full salary will be calculated not just on past one year's salary, but as an average of last five years' monthly income. This amendment, therefore, lowered the pension of several salaried individuals. Later in 2016, SC had already made it clear that there need not be any cut-off date and employees are eligible for pension on a higher salary. Here’s how EPS works A salaried individual contributes 12 per cent of his/ her basic salary towards the PF and the same amount is contributed by the employer. However, out of the employer’s 12 per cent share, 8.33 per cent goes towards the EPS. The amount which goes into EPS is, however, capped at 8.33 per cent of Rs 15,000 and not the actual salary. This means a maximum of Rs 1,250 (earlier Rs 541) can go into EPS every month, while 3.67 per cent of employer’s contributions stays in the PF of the employee.

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