EPF BENEFITS

EPF BENEFITS

The scheme
This monthly pension comes to you, courtesy the Employees’ Pension Scheme (EPS), 1995. The EPS is run by the EPFO as a subset of the EPF, which is mandatory for establishments with more than 20 employees. Every month, 12 per cent of your basic salary and dearness allowance (DA) goes into the EPF. Your employer contributes an identical amount. If the sum of your basic and DA is up to Rs 6,500, you have no choice but to contribute to your EPF; the same goes for your company. But if your basic and DA exceed Rs 6,500, you can opt out. 

Most of the money your employer and you put in goes towards building your EPF kitty, on which you are currently earning 8.5 per cent. A part of it, however, goes towards funding your pension. More specifically, of every Rs 12 your employer contributes, Rs 8.33 goes into the EPS; the government chips in another Rs 1.16. When you turn 58, you start getting a pension.