Government is Making Big Plans! More than Rs.10,000 Pensions will be Given to Private Employees
If you are working in a private company then you will get good news very soon. The government has taken major steps to provide benefits to private sector employees like government employees. For the future of low-salaried private employees, the government has launched the Employees’ Provident Scheme (EPF) or PF Scheme.
Government is Making Big Plans for Private Sector Employees
Till now only government employees were getting good pension but now the private sector employees are also eligible for pension at this level. The government is planning to increase the amount of pension for private sector employees under EPFO. Private sector employees will soon get a pension of Rs 10,500 per month after retirement.
Increase in Basic Pay
It is reported that the government is planning to increase the basic salary limit of EPFO members from Rs.15,000 to Rs.21,000. This change is expected to take effect in 2025. This will increase the pension received by private sector employees after retirement. Once implemented, lakhs of private sector employees will benefit under the EPFO scheme.
What is the Current Contribution of Private Employees in EPF?
Normally, private sector employees contribute 12% of their basic salary to the provident fund. The company they work for also contributes 12% to EPFO. However, the contribution made by the company is divided into two parts. 8.33% goes to Employee Pension Scheme (EPS) and 3.67% credited to Employees’ Provident Fund (EPF) Scheme. Thus, the amount accumulated in the pension scheme and the returns earned on it will pay the pension after retirement.
If the Salary Limits is Increased Pension contributions will Also Increase
Pension contribution will increase next year after the government raises the basic salary. Currently, EPS contribution is calculated at Rs.15,000 on the maximum basic salary. It limits the contribution to Rs 1250 per month. If the salary limit is increased to Rs.21,000, then the EPS contribution increases to Rs.1749 per month (8.33% of Rs.21,000). This will create more pension corpus. The monthly pension is more than Rs.10000. But to be eligible for EPS pension, you have to contribute to the scheme for at least 10 years. Pension payments start when you reach the age of 58.
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