Understanding Pension Calculations: How Much Will You Receive Monthly and What Happens After?

Dear All,

Can you please help me in the calculation of the pension scheme? Suppose a person has 20 years of experience and has around 50,000/- contributed towards the pension scheme. What is the monthly calculation to which he will be entitled to receive? Until when? In the case of his death, what percentage of the total amount will the nominee receive? Please help me with this information.

Thanks in advance.

Regards,
Laksh

Hey,

The simple formula is the last 12 months' average pay from the month of superannuation divided by 70, multiplied by the length of total service rendered.

Conditions - minimum 10 years of service rendered and attended the minimum age of 50 years, and other criteria as laid down because the scheme was effective from 1995.

R.K.P

To add, the benefit will continue until the death of the pensioner. In the case of the pensioner's death, the widow's pension will be reduced to 50% for the nominee.

Thanks, R.K.P

Hai guys

This the working with example

[b]Those who joined AFTER 15.11.1995[/b]

Here, the formula of calculation of pension is similar to that of a Govt. Employee. ie.,

Average Salary X Service

-------------

70

Maximum service for the calculation of service is 35 yrs. If a member has maximum service, pension will be:

Average Salary

-------------------

2

The Average Salary here refers is named as pensionable salary in the scheme. It is arrived by considering the average contributing salary preceeding 12 months from the date of exit

Eventhough you may be drawing Rs.20,000/- as salary per month, your company need to contribute only Rs. 541/- towards pension fund

Those who joined BEFORE 15.11.1995

Here, the formula of calculation of pension is:

Past Service benifit + Pensionable service benefit - Proportionate reduction

subject to minimum pension specified for each group.

( X - Rs.800 , Y - Rs.600, Z - Rs.500 )

These three categories of members are defined with reference to their age as on 16.11.1995 as follows:

„h X : those who have not attained 48 years

„h Y : those who have attained 48 years but less that 53 years ; and

„h Z : those who have attained 53 years or more.

Past service benefit:Portion of pension amount because of your service before 15.11.1995(For the calculation of this you have to refer 2 tables) Pensionable Service Benefit:Portion of pension amount because of your service after 15.11.1995(same as the calculation of pension who joined after 15.11.1995) Proportionate reduction: if the past service is less than 24 years and past service benifit + Pensionable service pension is less than Rs.500/-



For a member who joined EPF before 15.11.1995 have 3 components in Pension calculation:

(a)Past Service Benefit (b)Pensionable Service Benefit (c)Proportionate Reduction

For those who joined after 15.11.1995, only the 2nd component, viz., Pensionable Service Benefit is applicable

1. Past Service benefit: depends upon the wage as on 15.11.1995 and the service rendered in FPF '71 ( i.e. upto 15.11.1995 ) is as shown below: TABLE - A

Past Service Benefit in Rs. Benefit in Rs.

Wages as on 15.11.1995 is upto Rs.2500/ Wages as on 15.11.1995 is more than Rs.2500/-

Upto 11 years 80 85

More than 11 years but upto 15 years 95 105

More than 15 years but less than 20 years 120 135

Beyond 20 years 150 170

The above amount is the benefit payable on completion of 58 years of age as on 16.11.1995.

For the calculation of pension benefits before 58 years (if a member do not complete 58 years of age on 15.11.1995, his past service benefit will be increased by the below factor - Early pension cases ) the above benefit is multiplied by the TABLE - B factor to arrive at the past service benefit.

TABLE - B

If Years to 58 of age from 15.11.1995 is: then factor is:

less than 1 year 1.049

less than 2 years 1.154

less than 3 years 1.269

less than 4 years 1.396

less than 5 years 1.536

less than 6 years 1.689

less than 7 years 1.858

less than 8 years 2.044

less than 9 years 2.248

less than 10 years 2.473

less than 11 years 2.720

less than 12 years 2.992

less than 13 years 3.29

less than 14 years 3.621

less than 15 years 3.983

less than 16 years 4.381

less than 17 years 4.819

less than 18 years 5.301

less than 19 years 5.810

less than 20 years 6.414

less than 21 years 7.056

less than 22 years 7.761

less than 23 years 8.537

less than 24 years 9.390



2. Pensionable Service benefit=

pensionable salary X pen.service

---------------------------------------

70

subject to minimum of Rs.335, Rs. 438, Rs.635 for receiving early pension ( before 58 years ) for date of commencement of pension between 01/04/1993 and 15/11/2000, 16/11/2000 and 15/11/2005, 16/11/2005 respectively.

AND

subject to minimum of Rs.635, Rs.438, Rs.335 for receiving pension on or after 58 years for date of commencement of pension between 01/04/193 and 15/11/2000, 16/11/2000 and 15/11/2005 , 16/11/2005 respectively.

(If member has joined after 15.11.1995, only Pensionable Service Benefit is applicable)

3. Proportionate reduction: arises if the past service is less than 24 years and aggregagte pension calculated is less that Rs.500/-

Balaji L

Understanding Pensionable Service and Calculation

The argument that the maximum pensionable service is 35 years is incorrect. If an employee renders 40 years of service after 16.11.95, their pensionable service will be 40 + 2 = 42 years.

Service Division for Pension Calculation

For pension calculation, the service is divided into two parts: service before 16.11.95 and service from 16.11.95 onwards. The first part is called past service, and the latter is referred to as pensionable service. Past service is divided into four slabs:
- Service up to 11 years
- 12 to 15 years
- 16 to 19 years
- 20 years & above

If the salary on 16.11.95 is below Rs. 2500, the monthly compensation will be Rs. 80, 95, 120, and 150, respectively. For salaries of Rs. 2500 & above, the compensation will be Rs. 85, 105, 135, and 170. These amounts apply to those who turn 58 years old on 16.11.95. For those who reach 58 years after 16.11.95, the compensation will be multiplied by a factor specified in Table B, based on the time difference between 16.11.95 and the date of turning 58.

Pensionable Service Calculation

To calculate pensionable service, there is a formula: Pensionable Salary x Pensionable Service / 70. Pensionable salary can be categorized into three groups:
1. Below Rs. 6500
2. Rs. 6500 & above, but contribution at the statutory ceiling of Rs. 6500
3. Above Rs. 6500 & opted to contribute based on actual salary

In the second case, pensionable salary is Rs. 6500. In the other two cases, the pensionable salary will be the average of the last twelve months. Additionally, if the pensionable service is 20 years & above, a 2-year bonus will be granted.

For further details, please visit the website: http://epfindia.com

Example Calculation

- Date of Birth: 2.1.1961
- Date of Joining: 23.2.1987
- Salary on 16.11.95: Rs. 2500 & above
- Salary upon completion of 58 years on 1.1.2019: Rs. 6500 (Statutory Ceiling)
- Past Service: 8 years 9 months (approx.) rounded to 9 years
- Compensation: Rs. 85
- Factor as per Table B (for less than 24 years, i.e., the difference between 16.11.95 & 1.1.2019): 6.102

(This can be calculated as 1.08 to the power of 24 - 0.5, rounded to 3 decimals)

- Past Service Benefit: 85 x 6.102 = Rs. 519 - (A)
- Pensionable Service: 23 years
- Bonus (Service is 20 years & above): 2
- Pensionable Salary: Rs. 6500
- Pensionable Benefit: 6500 x 25 / 70 = 2321 - (B)
- Total Pension: (A) + (B) = Rs. 2840

I will insert an Excel worksheet to calculate the pension. Enter the Date of Birth, Date of Joining, Date of Separation from Service, Salary on 16.11.95, Salary on Separation from Service (in compliance with the contribution to the pension fund), and any breaks in service before and after 16.11.95, if applicable, in the green column. The results will appear in the yellow column. The red column is for static information.

If there are any errors or suggestions, please notify me.

Regards,
Abbas.P.S,
Secretary,
ITI Employees' Association,
ITI LTD, PALAKKAD - 678 623.
KERALA, INDIA.
Ph. [Phone Number Removed For Privacy Reasons]

My brother died after 2 years of service with a total salary of 10,000 per month. The company applied for widow pension for the wife and kid through the EPF scheme. I believe it is 50% for the wife and 25% of the total pension for the kid. However, how do I calculate the total pension?

Hi Friends, I am Suresh from Chennai and need your help on PF and Pension. I would really appreciate it if someone could help me out. My current PF balance (Employer + Employee) is 2,39,617, and the pension balance is 54,229. It would be really helpful if someone could calculate the total amount for PF (EE + ER) and Pension with a 4% increase year on year. I plan to retire at the age of 55, and my current age is 34 years.

Current PF Deductions

Here is my current deduction from the PF account: Employee contribution: 1,908, Employer contribution: 658, Pension Scheme: 1,250.

Thanks a ton in advance,

Suresh