The Employees’ Provident Fund Organization (EPFO) provides a range of retirement benefits to employees, including a monthly pension. However, many employees are unsure about how to calculate their pension amount and how to ensure that they receive the maximum benefit.
To help employees understand how to get a monthly pension of Rs. 7,200 after retirement, the EPFO has launched an online pension calculator. The calculator enables employees to calculate their expected pension amount based on their contribution to the Employees’ Provident Fund (EPF) during their working years.
The EPF is a retirement savings scheme that is mandatory for all employees earning a salary of up to Rs. 15,000 per month. The scheme requires both the employee and the employer to contribute 12% of the employee’s basic salary and dearness allowance to the fund. The contribution is deposited in the employee’s EPF account, which earns interest at a rate determined by the government.
To calculate the expected monthly pension amount, employees need to enter their basic salary, dearness allowance, date of birth, date of joining the EPF scheme, and date of retirement into the online pension calculator. The calculator then uses a formula based on the employee’s years of service and the average of their last five years’ basic salary and dearness allowance to calculate the expected pension amount.
The EPFO has set a maximum monthly pension amount of Rs. 7,500 for employees who retire at the age of 60 and have completed 20 years of service. However, employees who retire before the age of 60 or have completed less than 20 years of service will receive a lower pension amount.
To ensure that employees receive the maximum pension amount, it is important to contribute the maximum amount to the EPF during their working years. Employees should also ensure that their EPF account is updated regularly and that their employer is depositing their contribution to the fund on time.
In addition to the monthly pension, employees can also withdraw their EPF corpus after retirement. However, it is advisable to withdraw only a portion of the corpus and use the remaining amount to purchase an annuity plan, which provides a regular income stream throughout the retiree’s life.
In conclusion, the EPFO’s online pension calculator is a useful tool for employees to calculate their expected pension amount and plan for their retirement. By contributing the maximum amount to the EPF during their working years and ensuring that their account is updated regularly, employees can ensure that they receive the maximum pension amount. It is also advisable to use a portion of the EPF corpus to purchase an annuity plan and ensure a regular income stream throughout the retiree’s life.