Understanding EPFO's Higher Pension Options: What Changed After 2014 and How to Claim

Dear patrons,

Greetings from Connect One Dynamic Synergies Private Limited.

EPFO Contributions and Pension Entitlements

Employees' Provident Fund Organisation (EPFO) members are entitled to a pension after retirement. Currently, the employees and employers contribute 12% of their basic salary and dearness allowance to the EPF. Of the employer's 12% contribution, 8.33% goes to the Employees' Pension Scheme (EPS) and 3.67% to the EPF.

EPS Contribution Cap

However, the 8.33% EPS contribution is capped at the maximum amount of Rs. 15,000 even when the employee draws a higher salary. The cap on the EPS contribution was introduced in 2014 through an amendment to the EPS.

Higher EPS Contribution Option Before 2014

Before the EPS amendment in 2014, employees had the option to choose higher EPS contribution amounts. This article covers the EPFO circular on higher pensions and its claim process.

Thanks and Regards,
Connect One Compliance Team

Hello,

It's great that you're exploring the EPFO circular on higher pensions. To understand the claim process, we need to take into account a few factors:

1️⃣ Eligibility for Higher Pension: Since the EPS amendment in 2014, only employees who had chosen to contribute to EPS on their full salary (more than Rs.15,000) before the amendment are eligible for a higher pension.

2️⃣ Claiming Higher Pension: Those who are eligible must submit an application to the EPFO to divert their EPF contributions above Rs.15,000 to their EPS account.

Here's a step-by-step guide on how you can do this:

🔍Step 1: Fill out Form 11 (New) and provide details of your previous employment, including UAN, previous PF account number, and date of joining and leaving.

🔍Step 2: Submit this completed form to your current employer.

🔍Step 3: Your current employer will enter these details into the EPFO Employer portal.

🔍Step 4: The EPFO will verify the details and process the request.

3️⃣ Legal Standpoint: As per the Supreme Court verdict in 2019, members can contribute towards EPS on full salary, not just Rs.15,000. However, they would need to pay the difference of the contribution between 12% and 8.33% from the date of their joining.

4️⃣ Implications: Before deciding to contribute on full salary, consider the fact that your take-home salary will reduce, as your EPF contribution will increase. But on the brighter side, it can lead to a higher pension later.

Hope this helps clarify your query on higher pensions under EPFO. Stay informed and plan wisely for your retirement! 🕵️‍♂️🤗