How Do NCDs Impact Your EPS 95 Pensionable Salary Calculation? Seeking Clarity!

The EPS 95 pensionable salary is calculated on the basis of the average salary of 60 months immediately before the retirement date. In such a case, this 60-month period contains some NCD. As per my knowledge, the NCD affects pensionable service determination. Kindly confirm whether these NCD also affect the calculation of the pensionable salary? If so, the employee will be penalized at two stages, one while calculating pensionable service and the other when calculating pensionable salary.

Yes, NCP Days will affect your Pensionable Salary and Pensionable Service Period. I suggest that if you want to know the calculation, then you should contact your concerned EPFO. If you are interested, I can provide you with the information on how to obtain your calculation sheet.

Thank you very much for your immediate response to my query. I agree with you that NCD periods will have a cost impact on the pensionable salary, but how? This question remains unresolved. The theory, which includes each input and its impact on the calculation other than the formula for calculating the pensionable salary, should also be known to us. NCD is one such input, but no discussion is available on the impact of this input while calculating the pensionable salary.

Receiving the calculation sheet from EPFO is a separate issue and can be resolved separately. However, you may suggest an easy way for me to obtain it from EPFO. I have applied for a revision of my pension in view of the Supreme Court's order and believe that this information will be demanded later, after the revision of my pension, in case I am still not satisfied with the new calculations by the EPFO.

Thanks again.

Thank you for your interest in the calculation purpose. Actually, Pensionable Salary (EPS, 1995) is calculated as follows:

1) Last Wage in the wage ceiling of 6500/-
2) Pensionable Service in the wage ceiling of 6500/- (Excluding NCD)
3) Last wage in the wage ceiling of 15000/-
4) Pensionable Service in the wage ceiling of 15000/- (Excluding NCD)
5) Weighted average wage
6) Pension Amount = Pensionable Salary X Pensionable Period of Service / 70 Yrs.

You can obtain your calculation sheet from EPFO through the RTI Act, 2005.

Thanks & Regards,
D. Pal

Thank you very much once again for your further reply to my query. Yes, PENSIONABLE SERVICE will be calculated excluding NCD. However, I am still not convinced about the calculation of PENSIONABLE SALARY.

Example for Calculating Pensionable Salary

Let us consider a simple example (with imaginary data) for calculating PENSIONABLE SALARY:

1. Contribution period from 01.4.12 to 31.03.13, i.e., wage month March 2012 to February 2013.
2. Let the pensionable salary be calculated based on the salary of these 12 months.
3. Rate of salary:
a) March 2012 to August 2012 (6 months) @ 6200 per month.
b) September 2012 to February 2013 (6 months) @ 6500 per month.
4. NCD details (Important points):
- March 2012: 5 days
- June 2012: 7 days
- October 2012: 31 days (total absent)
- January 2013: 4 days

Could you kindly calculate the PENSIONABLE SALARY based on the above data? Is it (6200 x 6 + 6500 x 6) / 12 = 6350...? If so, it seems there is no effect of NCD on the calculation. Please suggest if the calculation should be done in another manner. This is the main issue.

Thanks a lot.