EPFO Higher Pension Scheme – The deadline to choose a higher pension was extended by the Employees’ Provident Fund Organization (EPFO) on Monday to 11th July 2023. Workers who began working before September 1, 2014, and continued working on or after that date but were unable to activate their joint option under the Employees’ Pension Plan may now do so before May 3, 2023. Read below to get detailed information related to the EPFO Higher Pension Scheme like highlights, Benefits, Eligibility Criteria, Contributions under EPS, Considerations to make before Choosing a Higher Pension, Steps to Apply for an EPFO Higher Pension, and much more
EPFO Higher Pension Scheme 2024
The Employees Provident Fund, or EPF, receives a monthly deduction of 12% of an employee’s basic pay (plus any permanent components like DA). Your company matches this, annual interest is stated, and you are given a lump sum payment upon retirement. While your employer’s 8.33 percent contribution may occasionally go into the Employee’s Pension Plan or EPS, a separate program for guaranteed pension payouts after retirement, your contribution of 12 percent goes totally into your EPF account. The government introduced several changes on September 1, 2014 A maximum salary of Rs. 15,000 is used to calculate the 8.33% EPS contribution.
The salary cap was Rs 6,500 up to that point, but companies could contribute more based on actual pay. Also, it was said that employees hired after September 1, 2014, earning more than Rs 15,000 per month, could no longer take advantage of EPS. These modifications were unpopular with the labor unions, therefore they successfully sued the EPFO in high courts. The Supreme Court (SC), which heard the EPFO’s appeal, issued its decision in November 2022.
Latest Update : EPFO Higher Pension Scheme Last Date Extended
The Employees’ Provident Fund Organization (EPFO) notified on March 13th, 2023, that the deadline for submitting requests for higher pensions under the Employees’ Pension Scheme (EPS) would now be 11th July 2023. The deadline for retirees who chose to accept the higher pension available to all qualified pensioners under the Employees’ Pension Plan of 1995 (EPS 95) before September 1, 2014, has been extended from 26 June 2023
According to a decision by the Supreme Court, employees who retired before September 1, 2014, and who did so by exercising the option under paragraph 11(3), are entitled to a pension based on increased salaries. Field offices had received instructions in this regard via circulars dated 29.12.2022 and 05.01.2023. If you decide to get a bigger pension, you’ll need to pay more into the EPS. The company contribution is limited to 8.33% of 15,000 rupees per month, but you can choose to pay up to 8.33% of your salary to the EPS (or 1,250 rupees per month) to benefit from a greater pension during your retirement years.
EPFO Higher EPS Pension Calculator
EPFO Higher Pension Details in Highlights
| Name | EPFO Higher Pension Scheme |
| Beneficiaries | Employees |
| Deadline Extended by | Employees’ Provident Fund Organization (EPFO) |
| Last Date | 11th July 2023 |
| Official Website | https://unifiedportal-mem.epfindia.gov.in/memberinterface/ |
Benefits of EPFO Higher Pension Scheme
Some of the key benefits of EPFO Higher Pension Scheme are as follows:
- If you have a greater pension, you’ll receive a larger monthly check during retirement.
- This can be very helpful if you don’t have any other sources of income.
- Your pension amount is fixed and unaffected by market movements because it is based on your years of service and average wage.
Eligibility Criteria
The eligibility criteria for EPFO Higher Pension Scheme are as follows:
- Members of the Employees’ Provident Fund Organization (EPFO) are eligible for a pension following retirement.
- You must have been a member of the Employees’ Pension Plan (EPS) for at least 10 years and be 50 or 58 years old to qualify for a higher pension (depending on when you joined the EPS).
Contribution under EPS
After the 2014 amendment, there were problems with pension contributions on higher salaries. Numerous workers admitted that they were aware that the shared option to contribute to the pension on the higher income amount had been exercised. The joint option submitted by numerous employees was denied by the EPFO. Without filing the joint option, employers contributed 8.33% of the pension on employees’ actual pay; however, the pension computation used the pensionable salary of Rs. 15,000 instead. To receive greater pensions based on the contributions made on actual wage amounts, numerous employees, therefore, filed cases in High Courts. This case was brought before the Supreme Court. The Supreme Court’s ruling is summarised as follows:
| Employee Status | Exercise of Joint Option | Eligibility for 8.33% of a Higher Salary’s Pension Contribution | Higher Pension Claim Mode |
| Employees in service as of 01- September-2014 | Exercised joint option and rejected by the EPFO | Yes | By filing a higher pension claim application |
| Employees retired before 01- September-2014 | Exercised joint option and rejected by the EPFO | Yes | By filing a joint option and higher pension claim application |
| Employees in service as of 01- September-2014 | Not exercised joint option but contributing to EPS above the cap of Rs.5,000/Rs,6,500 | Yes | By exercising the joint option within 03/05/2023 |
| Employees retired before 01- September-2014 | Not exercised a joint option | No | Not applicable |
EPFO Higher Pension Scheme Application Deadline
Individuals have until March 3, 2023, to apply for a higher pension under the Workers’ Pension Plan (EPS). As of September 1, 2014, members of the Employees’ Provident Fund Organization (EPFO) will now be able to select a greater pension based on their actual basic wages. The EPFO has issued this directive to allow older members to seek larger pensions and make bigger contributions to the EPS at 8.33 percent as opposed to the monthly cap of Rs 15,000 in pensionable salary.
Considerations to make before Choosing a Higher Pension
Some of the considerations to make before choosing a Higher Pension are as follows:
- Cost: Choosing a greater pension entails paying more into the EPS. The employer contribution is capped at 8.33% of Rs 15,000 per month; however, you can choose to contribute up to 8.33% of your pay to the EPS (i.e., Rs 1,250 per month). So, to receive a greater pension if your monthly salary exceeds Rs. 15,000, you must make an additional voluntary contribution to the EPS.
- Taxable vs. tax-free: It’s important to keep in mind that the lump sum from the provident fund is tax-free, however, the pension amount would be taxable. As a result, if you have additional sources of income and are in a higher tax category, the amount of your pension will be reduced due to taxes.
- Instead of a lump sum: Before anything else, you should be informed that a greater pension will be provided at the expense of a lump sum payment. So, it should only be selected if you prefer a greater pension after retirement to a higher lump payment.
- In the event of death: If an EPF subscriber passes away, their legal heirs and nominees are only eligible to receive 50% of the qualifying pension that the subscriber would have otherwise received. As a result, if the subscriber passes away before expected, the family will suffer a significant financial loss compared to the greater lump amount option.
- Long-term planning: When considering whether to choose a bigger pension, you should take your long-term retirement plans into account. You might not require a larger EPS pension if you have alternative retirement income options (such as a personal pension or investments). A greater EPS pension, however, can be advantageous if you don’t have any other sources of retirement income. Your unique financial condition and retirement objectives will influence whether you choose a larger EPS pension. When choosing a choice, you should carefully weigh the costs and rewards. To make an informed choice, it can be beneficial to speak with a financial counselor.
Steps to Apply for an EPFO Higher Pension Scheme 2024
To apply for an EPFO Higher Pension Scheme, the employee needs to follow the below-given steps:
- First of all, go to the official websiteof the EPFO Unified Member portal
- The homepage of the website will open on the screen
- Under important links, click on the Pension on Higher Salary: Exercise of Joint Option under para 11(3) and para 11(4) of EPS-1995 on or before the 3rd May 2024 link
- A new page will open on the screen with two options:
- Application form for validation of joint options
- Application form for joint options
- Click on the Application form for the joint option link
- A new page will open on the screen with two options:
- Select “Validation of joint options who retired before 01.09.2014 and executed joint option” if you left your job before that year.
- Select “Exercise of joint option for employees who were in service before 01.09.2014 and continued to be in service 01.09.2014 but were unable to exercise the joint option” if you retired after that year.
- After selecting one of the options, an application form will open on the screen
- Now, fill in the form with all the required details
- After that, click on the Submit button
- Each application will be digitally registered by the EPFO, and the applicant will receive a receipt number. It will send the applications to the appropriate employers, who will check them through an e-signature or digital signature before continuing with the application process.
- All applications will be transformed into e-files by the RPFC.
- After reviewing the documents, the responsible dealing assistant will forward the matter to the section account officer or supervisor.
- Discrepancies would be noted by the concerned account officer or supervisor following examination and sent to the Assistant Provident Fund Commissioners (APFC)/RPFC-II.
- After reviewing the application, the APFC/RPFC-II will notify the applicants by email, mail, phone, or SMS of the higher pension decision.
Formula for Calculating EPF Higher Pensions
The following is the EPF pension formula:
Monthly pension amount = (Pensionable Salary * Pensionable Service)/70
- The average of the last 60 months’ wages is referred to as the pensionable salary.
- The number of years that payments were made to the EPS account is referred to as pensionable service.
A weightage of 2 years will be applied to the service duration if an employee superannuates at age 58 after providing pensionable services of more than 20 years. Even though, there is a 35-year limit for pensionable service.