How Does Raising the EPF Ceiling to Rs. 15,000 Affect Employees? Let's Discuss!

Dear friends, please find attached:

1. An article on the impact of the increase of the EPF ceiling from Rs. 6,500 to Rs. 15,000.
2. FAQs on employees under the EPF Act to be published in the Labour Law Reporter.

Thanks

It is indeed an excellent article regarding the increase of the EPF ceiling from Rs. 6,500 to Rs. 15,000 and FAQs on employees under EPF. This will help young HR Managers to manage their EPF accounts.

Thank you very much for sharing the insightful articles on the impact of recent amendments to PF. One point I would like to bring to the notice of our friends is that the EDLI benefit is calculated at 20 times the ceiling limit of Rs 15,000/-, i.e., Rs 3 lakhs plus an additional 20%, which makes it a 3.6 lakhs benefit.

I stand corrected if any of my colleagues have a different viewpoint.

Regards,
Ashok Reddy

Dear friends, I also agree with Ashok Reddy regarding the EDLI benefit. Apart from this, there are errors in paragraphs F, L, M & N.

1. In Para F, it is stated that those who want to contribute above Rs. 15,000 to the pension fund will have to shell out an additional 1.16% contribution on the amount in excess of Rs. 15,000 from the employee's share and give a declaration (both employer and employee) to that effect within six months from the date of this notification. Failing which, any additional contribution made above Rs. 15,000 to the pension fund would be diverted to the EPF fund and will be given the interest as declared from time to time. EPFO has stated that from 01.09.2014 onwards, there will not be any provision to opt to contribute beyond the ceiling limit to EPS. Those who already opted for this provision before 31.08.2014 will only come under the purview of this clause.

2. As per Para L, "If the service is below 10 years and has not attained the age of 58 years, the employee can withdraw the pension amount or obtain a certificate to that effect and resume the count of service in the future if the employee joins employment service covered under the EPF & MP Act, 1952." There is no significance of age to get the withdrawal benefit. If the service is 10 years or more, the member will be entitled to get a pension; otherwise, the withdrawal benefit can be availed regardless of age.

3. As per Para M, "Pensionable salary up to 31st Aug '14 will be Rs. 6,500; thereafter, it will be Rs. 15,000 till further amendment." After 31st Aug 2014, the pensionable salary will be between Rs. 6,500 and Rs. 15,000 till July 2019. When a member completes 60 months (i.e., Sept 2014 to Aug 2019) after 01.09.2014, then only the pensionable salary will be Rs. 15,000.

4. As per Para N, "If the Employee’s Pension contribution is restricted to Rs. 15,000, then the maximum pension at the age of 58 years shall not be more than Rs. 15,000 p.m. as on date. Hitherto it was Rs. 6,500 p.m." The cap is not on the pension amount but on the pensionable salary. For those contributing on a ceiling salary of Rs. 15,000, there should be 68 years of service to get a pension of Rs. 15,000. This is impossible.

Regards,
Abbas P.S
ITI Ltd.,
PALAKKAD.

Very useful information. Please tell me if an employee's service is more than 10 years, are there any extra benefits in the pension scheme?

Regards,
anandgmysore.

I have been contributing to PF for the last 16 years and have transferred it whenever there was a change in company. While downloading my current PF statement through the EPF site, the pension contribution in the transfer row is not shown. The PF transferred amount is okay. How can I find out my pension amount? Can I consider it as the difference between the employee and employer share of the transfer amount? I have read that the minimum pension is Rs. 1000/-; what about the maximum pension one can receive and how is it calculated? Please explain with an example.

If the company is giving incentives on a monthly basis, and it changes every month, will the Provident Fund (P.F.) be calculated on this amount as well?

Extremely useful information, sir. Could you kindly let me know the source website from which you have extracted these articles? Awaiting your response.

To have a fundamental understanding of the new PF rule, I want to know whether the maximum deduction for an employee is set at 12% of ₹15,000 or 12% of the basic salary. Kindly clarify this for me in my case, where the Basic is ₹16,420, AGP is ₹6,000, and PF is ₹10,089.

If the limit is set to 12% of ₹15,000, am I allowed to add voluntary PF to the deducted amount?

Thanks in advance.

Regards,
Karthikeyan

You are correct that the statement of account in Form No. 23 shall reflect only the Provident Fund contributions from both employees and employers. However, the scheme does not indicate the employer's contribution towards the Employees' Pension Scheme (EPS). This is because the EPS is a separate account maintained by the EPFO. Regardless of contributions, the pension amount is paid to the employee only after reaching the age of 58 years and retiring from service. Previously, there was no minimum pension amount, but now it is fixed at ₹1,000. If an employee receives less than this amount according to the formula, it will be adjusted to ₹1,000. The maximum pension is determined only after the employee's retirement, based on their pensionable service and salary. The EPFO has established a formula for this purpose, which is used to fix and pay the pension to the employee until their death, and subsequently to their nominee as per the option mentioned in Form No. 10D of the scheme.

Regards,
Adoni Suguresh
Sr. Executive (Pers, Admin & Ind. Rels) Rtd
Labour Laws Consultant

In view of the recent judgment by the Honorable Supreme Court of India: what is the legal position for the calculation of pension if an employee's actual salary has been above Rs. 15,000? Will it benefit employees who have retired and withdrawn their PF contribution?

Please let me know if you need further assistance or clarification on this matter.

Dear GAURN SRT,

For PF members and retired and settled past members who are eligible to contribute on full salary to the pension fund, provided their contribution to PF is/was beyond the ceiling limit. Normally, it will be beneficial to members.

Abbas. P. S