Understanding PF Contributions: How Is the Rs. 1560 Split Between PF and Pension?

Hi all,

As known, a basic salary of 6500 is the ceiling for PF calculation, i.e., the employee contributes Rs. 780, and the employer contributes Rs. 780, totaling Rs. 1560 deposited in the PF account.

Requesting help on the bifurcation of Rs. 1560 with respect to the amounts allocated to the PF and Pension Scheme.

Kindly help.

Regards,
Nikhilesh

Dear Nikhilesh,

As per the PF Act, the total 24% (Employees 12% and employers 12%) is divided as follows:

The Employees' contribution, i.e., 12% of (Basic + DA), would go into the Provident Fund Account.

The Employers' contribution, i.e., 12%, is divided into 2 parts:
- 8.33% into Pension Fund of Basic & DA subject to a maximum of Basic + DA of Rs 6500 per month.
- The remaining part of 12% would go into Provident Fund.

Therefore, the 24% would be divided into PF Fund and Pension Fund as follows:

- Provident Fund = Total Employees' contribution + remaining part of employers' contribution
- Pension Fund = Only Employer contribution, which is 8.33% of Basic + DA, subject to a maximum of Basic + DA of Rs 6500 per month. If the Basic + DA is less than Rs 6500, the calculation would be based on the actual.

AMATYA