Can Pension Contributions Be Deducted Pro-Rata for Mid-Month Joiners? Seeking Advice!

Can we deduct pension amount on a pro-rata basis?

For example, if an employee joins an establishment on the 15th day of the month, and their basic salary is Rs. 16,000, they would earn Rs. 8,000 for 15 days. We deduct provident fund (PF) on Rs. 8,000, which amounts to Rs. 960. However, in the case of the pension scheme, the maximum limit is Rs. 6,500. Therefore, for 15 days, the pensionable basic would be Rs. 3,250. We would deduct pension contributions based on Rs. 3,250, which equals Rs. 271.

Please advise me on whether this calculation aligns with the pension scheme requirements.

Dear Saini,

Due to the PF Act, it is right to deduct his pension contribution.

Regards,
J Tomar
9313353831

Dear Mukesh Saini,

As per EPS-95, the statutory ceiling of the monthly salary is Rs. 6500/-. If not opted for in excess of Rs. 6500/-, you may not deduct beyond that. This means whether he has worked for one month or one day, the salary will only be taken into account.

Abbas.P.S

There is no need to deduct the pension contribution separately when you are deducting the PF contribution. It's a part of the PF contribution. I do hope that you know the percentage of the same.

Regards,