Pension under Employees Provident Fund EPF

 Pension under Employees Provident Fund EPF

-Dr. Lalit Kumar Setia

The Employees Provident Fund (EPF) is known as Retirement Fund for the employees associated with EPF. Every month a portion of the salary of an employee is deducted by the employer and deposited in his/her UAN (Universal Account Number) allotted by Employees Provident Fund Organization.

Amount of EPF and EPS

The amount of Employees Provident Fund EPF is increased every month with the contribution from salary of employee (i.e. 12% of the basic salary) and the contribution of employer is generally equivalent to the employee’s contribution. A portion of employer’s contribution i.e. 8.33% of the basic salary, is credited to the Employees’ Pension Scheme EPS. Suppose an employee is getting salary of Rs. 10000, then Rs. 833 will be deposited in his EPS every month by the employer i.e. 8.33% of the Basic Salary of employee. If salary is Rs. 15000, then Rs. 1250 will be credited. If salary is above Rs. 15000, then also maximum contribution to the EPS is up to Rs. 1250 per month.

The maximum amount of EPS contribution is 8.33% of basic salary (max. Rs. 15000) i.e. Rs. 1250 per month.

Who receives the Pension under EPS?

Only the employees registered in EPF and whose contribution is received for at least 10 years regularly, are entitled for pension. Generally, the amount of pension is given at the age of 58, not before that age. However, if an employee fills the form 10D then he can take the pension from the age of 50 years also. In case of death of an employee whole tenure of service is less than 10 years, then the amount of pension can be withdrawn in the year, in which the employee be of 58 years’ age. There are four types of pension provided by the EPFO:

a. Superannuation Pension:

It is provided to an EPFO subscriber at the age of 58. The employee may be in service or may not be in service, he is entitled for the superannuation pension. He has to fill form 10D for applying the pension.

b. Reduced Pension:

If an employee left the service, then he can start taking of pension from the age of 50 years. Such pension is provided as reduced pension. An EPF subscriber who made an active pension contribution in EPF for 10 years or more; can withdraw early pension if he or she has attained the age of 50 but is less than 58 years.

The pension amount is reduced to a rate of 4% per year until the employee reaches the age of 58 years.

Firstly original pension amount will be calculated and then a percentage (i.e. 4% per year) will be reduced from the original pension. Suppose an employee decides to take the reduced pension in the age of 54 years that is 4 years earlier than of 58 years. Then the pension will be reduced by 16%. If original pension is Rs. 5000 then he will be provided Rs. 4200 per month.

c. Disablement Pension:

If an employee becomes disabled and leave the service due to total or permanent disablement; then he is provided disablement pension. From the date of disablement, the employee gets pension paid for lifetime. The member will be required to have a medical test to ascertain that he/she is not fit for the work that he/she was doing before getting disabled.

d. Widow and Children Pension:

If an employee is died and the spouse and children are provided pension from the EPFO, then it is known as Widow and Children Pension. Such pension is provided to the spouse of died employee till the death of spouse or remarriage of the spouse. The minimum pension is Rs. 1000 per month and the amount of calculated according to Table C of EPS (i.e. the amount of pension which would have been admissible as if employee had retired on the date of death).

In case, the employees is decreased then the surviving children receive pension, in addition to the widow pension. This pension will be applicable till the age of 25 years of the children, maximum paid to two children. The amount will be 25% of the widow pension amount.

e. Orphan Pension:

If an employee is died and there is no surviving spouse. Then his son or daughter becomes orphan. Then up to the age of 25 years, the son or daughter is entitled for the pension. Such pension is known as Orphan Pension. It is an amount i.e. 75% of the widow pension.

f. Nominee Pension:

If an employee has no spouse and no children and he declares nominee by filling form 2(R) then the nominee is provided pension.

g. Dependent Parent Pension:

If an employee has no spouse and no children and he also not declared anyone to be nominee; then the dependent father or mother provided the pension after the death of the employee.

d.

Amount of Pension under EPS

After retirement the amount of pension under EPS is minimum Rs. 1000 per month and maximum Rs. 7500 per month. How it is calculated?

The monthly pension is equal to Salary multiple by years of EPS contribution and divided by 70. Suppose an employee’s pensionable salary is Rs. 15000 per month during the last five years of his tenure of service.

The pensionable salary is average monthly salary received by an employee in last 60 months before he/she decides to exit the EPS.

Then the monthly average salary of last five years will be Rs. 15000. If an employee works for 35 years, then his pension will be

(15000x35)/70 = Rs. 7500 per month which is maximum pension.

Because the contribution to EPS is based upon the salary up to Rs. 15000, the pension cannot exceed Rs. 7500 per month.

What will happen if upper limit of Rs. 15000 is removed?

The limit of Rs. 15000 may be removed and in case, it happens, then the amount of pension will be increased. For example, if the average salary of last five years is. Rs. 42000 and the employee worked for 30 years, then the pension will be (42000x30)/70 i.e. 18000 per month.

*Copyright © 2021 Dr. Lalit Kumar. All rights reserved. 

This article is written by Dr. Lalit Kumar Setia; a renowned author and trainer. He completed his Doctorate in Commerce from Kurukshetra University Kurukshetra and MBA in Information Technology from GJU, Hisar. He also wrote two books, 15 research papers, and organized more than 200 Training Courses during his working period since 2006 in Haryana Institute of Public Administration, Gurugram. The article was published on 24th September 2021 and last updated on 24th September 2021. The writer can be contacted on lalitkumarsetia@gmail.com 

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https://drlalitsetia.blogspot.com/2018/12/payment-and-status-of-income-tax.html

New Challenges for Employees During Covid

 New Challenges for Employees During Covid

-Dr. Lalit Kumar

Expenses Up and Incomes Down:

The Covid-19 is making the life of middle class citizens critical. Those who are doing business are facing slowdown in business and those who are serving companies are facing cut in the salaries or retrenchment in the company making them to leave the job. In all countries, developed and developing nations, the unemployment is emerging as a prime economic problem of the nations. The expenses over medical services, emergency expenses; reduced the savings and investments of the citizens and their incomes also reduced significantly.

Non-availability of Loans or Credit at cheaper rates:

The slowdown in economy leads to cash crunch even in the financial institutions and there is non-availability of loans or credit at cheaper rates. In other words, the rate of interest on loans or credit have increased significantly. The employers or companies are not offering loans to the employees as there is scarcity of cash in the companies. The financial institutions are taking advantage of such scarcity and giving loans at higher rates of interest.

Online or Virtual Job Opportunities increased the competition among Employees:

The remote working patterns in the companies and businesses increased the competition and now there are more number of individuals available to work from remote areas. There is challenge to sustain the existing jobs as the companies are recruiting talented people who can work from remote areas as well. Due to such availability of the people, the existing pay packages are not increasing and the companies are cutting the salaries. As there is lack of employment, the employees are not going against the companies due to fear of losing the job.

Need of Budgeting and Financial Planning

Everyone requires to do proper planning to manage the monetary resources. There are problems in increasing the revenues, therefore, it is required to cut the expenses by taking advantages of discount in purchasing goods, postponing the purchase of fixed assets and unusable expenses. It is required to keep sufficient amount of cash in hand, to take the advantages of offers whenever available in the market due to cash crunch. Further, to stay fit and reduce the expenses over medical facilities, it is must to adopt Yoga and Meditation in life.

Each Employee Asks Himself - Am I doing good?

Each Employee Asks Himself - Am I Doing Good?

By Dr. Lalit Kumar Setia 

What does an Employee do for an Employer?

I saw in newspapers, the news stating that the Government employees salaries increased and it is burden on the Finance Department and public to meet their expenditure. It is very easy to criticize the benefits generally entitled to each employee working in Government or Companies. The question here is what does an employee do for an employer that he/she is deserved for such benefits?

When we differentiate the time table of an employee and a person who is not employed; we find that an employee is bound with taking limited sleep hours, then wake up and be prepare for the office. For more than 8 hours, an employee spends for doing work for the employer and thereafter, he/she is assigned work to be completed even by sparing time after office hours. Gone are the days, when there was less work burden and jobs were comfortable to perform the assigned work. Twenty to Forty action items are always in the hands of an employee to complete for the employer and the same is ensured with the help of verification of his/her work at regular intervals.

Hidden Contributions of an Employee:

No doubt, an amount i.e. salary is paid for doing the work. The employee put his whole life or the tenure of employment in the job/work. It is time to look into the obligations of an employee towards the assigned work/job. The employers ask to do something extra everyday, without looking the existing burden of the employee. The employee manage time, again manage time, when things becomes beyond control, stress comes to the life and the employee be suffered from a lot of diseases. The employers provide medical facilities so that such diseases can be treated but these benefits are criticized by the people not serving the employers because 'Only the Wearer knows where the show pinches'. 

The happiness at home, depends upon the desire of employer. The time between sunrise and sunset is devoted to the employer with following hidden sacrifices:

(i) Boss is always right:

Even if an employee is doing hard work but the self appraisal of his work is upon the mercy of the employer to accept his performance or point out the drawbacks which can easily be seen in everyone on work. An employee is born to accept it and he cannot say anything against the remarks of an employer because the conflicts which may form due to his representations are added to his personal file for action by the upcoming bosses. An employee has to accept in all conditions that boss is always right. The work pressure which is usually taken, is hidden to others.  

(ii) Devoting 100% efforts to perform duty:

An employee is bound to put 100% efforts to accomplish the targets or the performance expected from him. Each employee should put whole heart in the work/job everyday and the employers are expected to respect for his devotion to work. The methods of work are followed sincerely by an employee and the rules, policies, directions, guidance of the top management is the first priority to compliance.

(iii) Creativity of Employee:

The employees are expected to sort out problems of their workplace and perform with the creative solutions. The employee learn with experience and become a candle to guide juniors with his flame of knowledge and skills to tackle problems at work. Everyday an employee learns something new and he applies his brain and heart in the interest of an employer/organization. The big decisions require more energy to put into, the emotional energy of an employee works round the clock to achieve organizational goals. It is hidden and nobody can measure the quantum of the emotional energy applied in each decision of employee and there are too many examples of employees leaving their job due to more work burden.

(iv) Contribution in team work of organization:

The organization works for its customers and the public sector enterprises work for rendering public services directly or indirectly. The coordination with co-workers, bosses, and subordinates cannot be measured in terms of outcomes and such contribution is always hidden. Whenever an organization allocates the authorities, the employees be responsible and accountable to perform the desired functions; to contribute towards the functions of organization it is must to coordinate with others and manage the relationships. 

(V) Integrity, honesty and ethical values:

 The work is worship and the employees are fully committed to perform their duties with integrity, honesty and ethical values. While doing their work, they don't pick up their personal calls, they don't perform their private household functions at the workplace; such things are expected and also done by each employee and nobody quantify such sacrifices of an employee towards the organization. The employee never complains if he is facing financial hardship in performing the functions requiring spending money out of his own pocket. He is required to travel from one place to another, he is also required to work with ethical values with code of conduct applies upon them for the workplace functions. 

Even if an employee is stressed due to work burden he is not expected to complain about his employer to superior authorities or to the customers/citizens. He has to put a smile on face always.

(VI) Health of Employee:

It is well said that whatever a person earns up to the age of retirement in his job, he loses his health to a great extent and spend a lot of money to regain the health after retirement. The emotional energy requires more use of brain and the brain cannot function unless the body takes enough rest or sleep. Due to lack of rest, the sufferings come to life and the life is disturbed entirely. To maintain the health, an employee spends a lot on doing exercise, taking adequate diet, and also making expenditure on entertainment to feel relaxed. 

(VII) Work after office hours:

The personal life moments are sacrificed for the office work. A sales professional is required to pick and answer calls of customers after duty hours and a IAS officer also responsible to the citizens 24 hours and 7 days without break. Whatever work is assigned by the employer, even if it is not being covered in office hours, that employee cannot say no. The loyalty of an employee is earned by doing work for the organization and putting hard work continuously. The customers and citizens identify the employee with the name or brand of the organization only if he is putting hard work for that organization. 

In today's work environment, there is lack of trust among the boss and employees. Let us have a look upon this aspect of employee's life:

Lack of Trust among Boss and Employees

The success and failure of an organization depends upon employees, the manpower who is the only active resource using other resources with intellectual power. But in today’s business environment, the trust factor has become most important. The Board of Directors, Promoters, and Government are looking employees with doubt as they are not performing to their full potential, and each employee is bound to ask himself, am I trusted about delivering my best efforts in achievement of the organizational goals.

(a) Doing extra work after office hours:

The needs of each individual make him convinced to think about getting more monetary benefits at work-space. Most of the employees start earning by working in off-hours of their routine job. Those who cannot earn more always think whether he or she is being deprived from monetary benefits or not. The legal structure of a nation, also plays great role in making employees benefited by filing civil suits instead of being victim of deliberately framed rules of the bosses, administrators etc. In service rules or departmental codes, each employee is provided with some rights and in case of infringement of rights, an employee becomes entitled to file a civil suit in the court of civil judge claiming therein the benefits which have not been given to him in violation of some service rules. After receipt of notice issued by civil judge it is duty of the departmental head or boss to examine the case in the light of provisions of service rules or departmental code. In case, under the provisions of service rules the plaintiff is entitled to benefit as claimed by him or her in the suit, a proposal is required to be prepared and put up to the authorities for grant of said benefit followed by bringing the facts in the notice of court that relief claimed by the plaintiff has already been given to the plaintiff.

(b) Conflict and non-performance over workplace

On the other hand, if the claim of the plaintiff is contrary to provisions of service rules or departmental code in that case it is duty of department concerned to examine the civil suit and to prepare reply mentioning therein that the plaintiff is not entitled to the benefit claimed by him in the present civil suit because the claim of the plaintiff is contrary to the provisions of service rules. In such cases, the reply is prepared and then civil suit is disposed off by the civil judge. If a decree is given in favour of plaintiff which is contrary to provision of service rules, in that case Department on the advice of District Attorney and L.R. can file first appeal in the court of District Judge and if the same is dismissed in that event the next Appellate Court is Hon’ble High Court and State Government can approach Hon’ble High Court by way of RSA.  After dismissal of RSA there is only one Appellate Court i.e. Hon’ble Apex Court i.e. Supreme Court of India and Government can approach the Hon’ble Apex Court. 
Apart from the above, Government employee can invoke the jurisdiction of Hon’ble High Court under Art.226 of Constitution of India if some fundamental rights provided under the provisions of Constitution have been infringed by the department.  In this case LPA can be filed against the judgement of Single Judge and SLP can be filed against the judgement of two judges of Hon’ble Court.

*Copyright © 2018 Dr. Lalit Kumar. All rights reserved. 

This article is written by Dr. Lalit Kumar Setia; a renowned author and trainer. He completed his Doctorate in Commerce from Kurukshetra University Kurukshetra and MBA in Information Technology from GJU, Hisar. He also wrote two books, 15 research papers, and organized more than 200 Training Courses during his working period since 2006 in Haryana Institute of Public Administration, Gurugram. The article was published on 26th December 2017 and last updated on 19^th September 2021. The writer can be contacted on lalitkumarsetia@gmail.com