Confused About EPFO Pension Fund Contribution Limits? Seeking Clarity on Employer's Share

Dear Sir,

I am a member of the Employees Provident Fund Organisation, and I want to know in detail about the maximum ceiling of contribution to the pension fund out of the employer's share. The EPFO in Bhubaneswar is not providing any correct information relating to this critical question.

Debashis

Employer's share to the Pension Fund is limited to 8.33% of the workman's salary subject to a maximum of Rs 6500. Therefore, the monthly pension fund contribution per employee will be limited to Rs 541, i.e., 8.33% of Rs 6500.

Regards,
Madhu T.K

Dear T.K. Madhu,

Many thanks for your clarification. Here, I would like to state that my monthly salary is sufficiently higher, and my office contributes 10%, i.e., Rs. 1655 towards my PF contribution. However, the accounts section of my office only deposits Rs. 541 into my pension fund and diverts the balance fund to my PF account. Is it not possible to deposit more than Rs. 541 in the pension fund so that I can receive a higher pension after my retirement? I am greatly worried about this matter. In my case, 8.33% of Rs. 1655 amounts to Rs. 1378, and I would like this amount to be deposited into my pension fund to ensure a higher pension after retirement. Please offer me your valued judgment.

Debashis

Dear T.K. Madhu,

Many thanks for your clarification. Here, I would like to state that my monthly salary is sufficiently higher, and my office contributes 10%, i.e., Rs. 1655 towards my PF contribution. However, the accounts section of my office deposits only Rs. 541 into my pension fund and diverts the balance to my PF account. Is it not possible to deposit more than Rs. 541 in the pension fund so that I can receive a higher pension after my retirement? I am greatly worried about this issue. In my case, 8.33% of 1655 amounts to Rs. 1378, and I would like this amount to be deposited into my pension fund to ensure a higher pension after retirement. Please offer me your valued judgment.

Debashis

For the time being, the pension fund contribution is limited to 8.33% of Rs 6500 or Rs 541. If your contribution towards EPF is Rs 1655, and the employer is also contributing a similar sum, then what is the issue? The employer is contributing Rs 1378 to your Provident Fund along with your own contribution, and that amount is also available to you in a lump sum when you get superannuated. Moreover, this practice is beneficial to you when you go for an advance from PF as the eligible amount of advance is decided by the amount to the credit of your EPF account and not clubbing both EPF and Pension Fund accounts.

In the future, let us hope that the government will revise the contribution limit to the pension fund. I have one doubt. You have mentioned that your employer's contribution is 10%; is it not 12%? 10% is applicable only to sick industries.

Regards, Madhu.T.K

Dear Mr. Debashish,

Good Morning.

As per PF Policy, the maximum basic salary taken into consideration is Rs. 6,500 per month. Hence, Rs. 541 will be considered as 8.33% of Basic Pay from the employer's share. If the basic is above Rs. 6,500, then the ceiling for employer contribution at 8.33% will be Rs. 541, and the remainder will be added to the employer's PF Contribution.

For any other queries, please contact in person.

S. Bhaskar
9908732667

Dear Bhaskar & Debashih,

It is true that we haven't experienced pension contributions in excess of the ceiling limit. However, I shall quote section 11(3) of EPS-95 as follows:

"The maximum pensionable salary shall be limited to Rupees six thousand and five hundred per month. Provided that if, at the option of the employer and employee, contributions are paid on a salary exceeding Rupees six thousand and five hundred per month from the date of commencement of this Scheme or from the date the salary exceeds Rupees six thousand and five hundred, whichever is later, and 8.33% share of the employer is remitted into the Pension Fund, the pensionable salary shall be based on such higher salary."

Hence, kindly take up the matter with the concerned Office of the Regional PF Commissioner.

Abbas.P.S

Dear Riah,

12% is the contribution to PF. Even though the statutory ceiling of salary is Rs. 6500, it depends on the employer whether they have to contribute in excess of the ceiling limit. There is no restriction from PF authorities.

Abbas

We have mistakenly contributed more than Rs. 541 to the pension fund for several months this year. Now, how can we revise the same? Can we revise Form 12A? I would be very grateful if anybody could provide guidance on this.

Regards