If you are retired but started receiving your pension (EPS) before September 1, 2014, there are some changes you should know about. The Employee Provident Fund Organisation (EPFO) has issued a circular that explains how pension calculations will be done differently for those who retired before September 1, 2014, compared to those who retired after.
If you started receiving your pension (EPS) before September 1, 2014, then the way your pension is calculated is changing. Basically, the calculation for a higher pension will now be based on your average monthly pay during the 12 months before you retired (i.e. when you left the pension fund membership).
If you retired or will retire on or after September 1, 2014, then there are some changes you should be aware of regarding the calculation of your EPS pension. The Employee Provident Fund Organisation (EPFO) will now use the average salary you earned during the 60 months prior to your retirement to determine the amount of your pension. This means that if you earned a higher salary during your last five years of work, your pension may be higher as well.
It's worth mentioning that the government tweaked the pension calculation formula back in September 2014. Before that, they used to consider the average salary for the 12 months prior to retirement. But since September 1, 2014, the government has changed that to the average salary for the 60 months before retirement. This change meant that people retiring on or after that date could end up receiving a lower pension than before.
The current formula for calculating pension under the EPS scheme is: (average salary of 60 months X service period) divided by 70. The average salary above is the basic salary of an employee. However, if you opt for a higher EPS pension, the salary used for the calculation of a higher pension will be the full actual salary, including allowances, instead of just the basic salary.
For example, let's say you joined the EPS scheme in October 2008 and plan to retire in September 2033 after 25 years of service. The EPFO will calculate your pension based on your average pay during the last 5 years (60 months) of work. However, if you had retired on or before August 31, 2014, your pension would have been calculated based on your average pay during the last year of work instead.
The EPFO has issued a circular that explains the process for applying for a higher EPS pension. The circular also lays down the procedure to be followed by the field offices to accept such applications. If you don't have proof of joint request/undertaking/permission, you can still apply for a higher pension by submitting specified documents along with the joint pension application form. The circular, dated June 14, 2023, is applicable for an eligible employee.
The circular from the Employee Provident Fund Organisation (EPFO) on June 14, 2023, applies to employees who are eligible for a higher EPS pension but don't have proof of joint request/undertaking/permission. In such cases, the EPFO field offices can accept higher pension applications as per a specific procedure.
First, let’s look at the list of criteria:
To apply for a higher EPS pension, you'll need to submit the following documents:
To apply for a higher EPS pension, you'll need to include at least one of the documents we listed earlier. Don't worry if you don't have proof of joint request/undertaking/permission, you can still apply by submitting the specified documents along with the joint pension application form.
Also, if you forgot to submit proof of joint declaration when you applied for a higher EPS pension, you can still do so at the time of final claim settlement through your last employer. Remember, you can submit the Joint Request and undertaking of employer for permission under Para 26(6) (pro forma enclosed) anytime before the grant of pension on higher wages.