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Private sector employees can get a higher pension: What this means for you

If an employee has become an EPFO subscriber before Sept 2014, he can increase contribution to Employee Pension Scheme

Tinesh Bhasin  |  Mumbai 

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If you have been an employee provident fund (EPF) subscriber before 2014, you can now opt for receiving a monthly instead of withdrawing the accumulated corpus in one go. The has directed Employees’ Provident Fund Organisation’s (EPFO) to allow subscribers to receive a just like government employees do.

Many employees were not aware that had started a scheme in 1995. In this scheme, had then said that an employer has to contribute 8.33 per cent of the basic or Rs 541 a month (whichever is lower) towards Employee Scheme (EPS). This gave a limited to an employee depending on the number of years he was enrolled in the scheme.

At that time, also said that if an employee wanted a higher pension, he could increase the contribution to 8.33 per cent of the actual basic But had to be intimated that the employee wants to contribute more than Rs 541 a month towards EPS.

Most employees were not aware of the provisions. On retirement, some employees asked to commute their EPF contribution to EPS. But declined and said that it had to be done within six months of joining the scheme. The pensioners approached the court to seek relief as the six-month timeline was not mentioned in the notification. “The ruled in favour of the subscribers. The Court said that it’s a beneficial provision and should allow its subscribers to take benefit of it,” says Kuldip Kumar, partner and leader - personal tax, PwC India. The court even allowed retired subscribers to get a by paying the required amount to

experts say that as the directive came from the Supreme Court, it’s binding on and all those who joined before September 1, 2014 can benefit. Those who have joined after September 1, 2014 and have a above Rs 15,000 are not eligible for a However, those starting with salaries lower than 15,000 can contribute to EPS. But the cap of Rs 15,000 will kick in when their rises. experts say that those eligible for a can submit applications to through their companies to increase the

However, not all employees give their contribution to Some companies have their own “There’s still lack of clarity whether those in private trusts would be eligible for increasing their contribution towards pension,” says Kumar. experts feel that will soon provide clarity on this issue.

First Published: Thu, November 23 2017. 14:42 IST