EPFO Higher Pension: Considerations to make for taking a decision
Contents News/Article Date:28th June 2023
Relating to which Act: The Employees Provident Funds & Miscellaneous Provisions Act, 1952;
Penalty under the Act: Whoever, for the purpose of avoiding any payment to be made by himself under this Act [the Scheme, the [Pension] Scheme] or the Insurance Scheme] or of enabling any other person to avoid such payment knowingly makes or causes to be made any false statement or false representation shall be punishable with imprisonment for a term which may extend to one year, or with a fine of five thousand rupees, or with both].
Applicable to which State: All the States and Establishments to be covered by these Acts
Type: Online Process News Report
Pertains to: PF registered establishments and members
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And in the current instance
EPFO Higher Pension Scheme: The deadline to choose a higher pension was extended by the Employees’ Provident Fund Organization (EPFO) on Monday to 11th July 2023.
EPFO Higher Pension Scheme 2023
Latest Update: EPFO Higher Pension Scheme Last Date Extended to 11th July 2023.
Considerations to make before Choosing a Higher Pension
Subject: EPFO Higher Pension: – Considerations to make for taking a decision
Appended is the complete news item
EPFO Higher Pension: Considerations to make for taking a decision 28th June 2023
EPFO Higher Pension Scheme: The deadline to choose a higher pension was extended by the Employees’ Provident Fund Organization (EPFO) on Monday to 11th July 2023.
EPFO Higher Pension Scheme 2023
Latest Update: EPFO Higher Pension Scheme Last Date Extended to 11th July 2023.
EPFO Higher Pension Scheme Contribution under EPS
| Employee Status | Exercise of Joint Option | Eligibility for 8.33% of a Higher Salary’s Pension Contribution | Higher Pension Claim Mode |
| Employees in service as of 01- September-2014 | Exercised joint option and rejected by the EPFO | Yes | By filing a higher pension claim application |
| Employees retired before 01- September-2014 | Exercised joint option and rejected by the EPFO | Yes | By filing a joint option and higher pension claim application |
| Employees in service as of 01- September-2014 | Not exercised joint option but contributing to EPS above the cap of Rs.5,000/Rs,6,500 | Yes | By exercising the joint option within 03/05/2023 |
| Employees retired before 01- September-2014 | Not exercising a joint option | No | Not applicable |
Considerations to make before Choosing a Higher Pension
Some of the considerations to make before choosing a Higher Pension are as follows:
- Cost: Choosing a greater pension entails paying more into the EPS. The employer contribution is capped at 8.33% of Rs 15,000 per month; however, you can choose to contribute up to 8.33% of your pay to the EPS (i.e., Rs 1,250 per month). So, to receive a greater pension if your monthly salary exceeds Rs. 15,000, you must make an additional voluntary contribution to the EPS.
- Taxable vs. tax-free: It’s important to keep in mind that the lump sum from the provident fund is tax-free, however, the pension amount would be taxable. As a result, if you have additional sources of income and are in a higher tax category, the amount of your pension will be reduced due to taxes.
- Instead of a lump sum: Before anything else, you should be informed that a greater pension will be provided at the expense of a lump sum payment. So, it should only be selected if you prefer a greater pension after retirement to a higher lump payment.
- In the event of death: If an EPF subscriber passes away, their legal heirs and nominees are only eligible to receive 50% of the qualifying pension that the subscriber would have otherwise received. As a result, if the subscriber passes away before expected, the family will suffer a significant financial loss compared to the greater lump amount option.
- Long-term planning: When considering whether to choose a bigger pension, you should take your long-term retirement plans into account. You might not require a larger EPS pension if you have alternative retirement income options (such as a personal pension or investments). A greater EPS pension, however, can be advantageous if you don’t have any other sources of retirement income. Your unique financial condition and retirement objectives will influence whether you choose a larger EPS pension. When choosing a choice, you should carefully weigh the costs and rewards. To make an informed choice, it can be beneficial to speak with a financial counsellor.