Is the New Pension Fund Contribution Ceiling Fair? Let's Discuss Its Impact on Employee Savings

Dear Seniors, One of our employees has raised a question regarding the enhancement of the ceiling of the contribution to the Pension Fund. Specifically, the contribution has increased from 8.33% of Rs. 6,500/- to 8.33% of Rs. 15,000/-. As a result, it has decreased the contribution to their PF fund by the employer, leading to a loss of Rs. 700/- per month from their part. Isn't it a valid question?

Regards,
Sandeep Kumar Rai

I believe your question pertains to pension contributions. Following the increase in the ceiling to Rs. 15,000, the PF contribution will amount to Rs. 1,800 instead of Rs. 780, resulting in a difference of Rs. 1,020. Simultaneously, the pension contribution will rise from Rs. 541 to Rs. 1,250, marking an increase of Rs. 709.

As a result of this additional monthly contribution of Rs. 709, the member can anticipate a pension increase of approximately Rs. 39 throughout their lifetime. Furthermore, in the event of the member's passing, their spouse and children will also reap the benefits. Upon the member completing 20 years of pensionable service, they will be granted a 2-year bonus, further enhancing their benefits.

Regards,
Abbas P.S