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ok, mr. devrajan,
but i want to know if basic exceeds 6500 and still the company deducting pf from it and also contributing its 12% share, ok. Now my query is this that suppose basic is 10,000 and by 12% from employer's share if we take 8.33% means rs. 833/- then can the company put that 833/- towards pension? i am asking this since in pension rule it is mentioned that basic salary limit is 6500.

From India, Pune
hi rakesh

pension can be maximum contributed as 8.33 % on basic upto Rs. 6500.

Anything over that amount of 780/- the balance goes to provident fund. eg.

on 10, 000 basic if you are contributing at rate of 12% which is equal to Rs. 1200/-then 8.33% of 6500= 541 goes to EPS and 1200- 541= 659/- goes to EPF.

The above is a prctice followed by most of the companies however few are aware that the PF Deptt gives an option where employer's contribution of 12% goes on actual basic salary and he opts out of this cieling limit of 6500/- for EPS. Then 8.33% of actual total contribution which is 833/- would go to EPS.

Employers usually do not opt for this cluase as it increses the liability on the employer however certain pro- employee and cash- rich companies have opted for this option whereby they keep on contributing on actual basic salary.

Do you believe this -if the employers opt for the second option then a person whose basic salary is 10,000 /- now and suppose he gets avg. increment of 10 % every year then his pension after 30 yrs of working would be something of the tune of one lakh per month, maybe more!!!!!!!!!! whereas as per the cieling option it would be around 3250/- per month only.


From India, New Delhi
hi rakesh, this devarajan again,
regarding the pension clarification, as per the act if the salary of an employee exceeds rs.6500/- per month, the the normal pf and pension deduction is as follows:
suppose if an employee salary is 10,000 p.m.,
his pf calculation would be
employee contribution Rs1200/- (12%), out of employer contribution (12%) - only rs.541/- will go to pension rest of the amount i.e., 1200 minus 541=659 will go to the employees provident fund. the normal procedure of 8.33% and 3.67% share from the ER never applies here in this case, since the salary ceiling is over 6500/- and therefore a flat amount of rs.541/- only is deducted from the employers share for pension. (6500 * 8.33% = 541)
hope this clarifies your query. if there any doubt further you may revert back to me
R Devarajan

From India, Madras
Dear Mr. Devrajan
You are right as far as the option to opt for a cieling of 6500/- goes however if an employer opts out of this option and inturn starts to contribute on actual basic every year then in that case 8.33 of actual basic may go to EPS which is 833/- rupees.
I shall elucidate it further-
(1) If employer goes for clause putting cieling limit then-
The person with basic salary 10,000 will have 541/- as EPS and rest (1200-541= 659/-) as EPF
(2) If an employer chooses to keep on contributing as per the actual basic salary without putting any cieling of 6500/- then the person with 10,000 basic salary will have 833/- going into EPS and (1200-833= 367/-) going into EPF.

From India, New Delhi
Dear All,
For PF case you can refer to my post if you wish to:
<link no longer exists - removed>
Dear Rakesh,
Thank you for starting this thread but I feel like you are a quiz master testing our knowledge.

From India, Thane
hi rolly
as per your definition to point No.2, if the employee opts to contribute without considering the ceiling, then he can do so. PF is a social security scheme, if an employee wishes to contribute any amount it will be considered as voluntary contribution to the scheme. ultimately the employee develops a saving habit and derives benefit from the scheme.
am I right

From India, Madras
Mr. Rolly and devrajan,
just concentrate here.
though if we contribute rs. 833 as 8.33% of 10,000/- but still the pension amount after retirement will not (?) rise accordingly for the said employee. since i think the max limit of pension is mentioned in pension act. though i am not sure about this max limit of pension after retirement thats why i started this discussion.
if u can clear my doubt then please help me.
( we r discussing about industrial employee, so please dont compare it with Govt. employee, since Govt. employee having different scheme specialy for them, in which the pension can rise for Govt. employee, but just check whether for pension scheme related to industry , is there any max. limit of pension after retirement related to that 8.33% of 6500 , since if there is such max limit then there will be no use of contributing more than 541 , i.e. 8.33% of 6500)
this very imp so pls clarify it if anybody knows the details of this.

From India, Pune
Dear Rakesh
there is a pension limit if employer is contributing taking into account the cieling of 6500 however if the employer contributes at 8.33% of actual basic salary then in that case pension amount is decided according to average of basic salary (actual) drawn during the last year i.e. the year preceeding the retirement.
so in such case pension amount becomes directly proportional to avg. of last yera's salary drawn.
Ms. Rolly

From India, New Delhi
Hi All,
I am poonam and i have cleared written exam of SAIL in HR domain and my gd and interview is on 12th November. could you please help me how and what should I prepare for it. Along with this i want to have thorough knowledge of labour laws and industrial relations too. Could you plz help me by mentioning good books or e-books or having good materials on hr topics. Kindly forward to my mail ID
Plzzzzzzzz help
Poonam Rani

From India
i recently joined this hr forum and very much interested in hearing u hr people
i would like to tell u that without notice period employer could not retrench/terminate
servicing of notice peroid is a manadatory requirement
looking to hear more from your end

From India, Lucknow

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