In pursuance of Section 6A of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, (The Act) Employees’ Pension Scheme (EPS) was introduced in November 1995. There by EPFO members are entitled to a pension after attaining the age of 58 years/retirement. The Act originally did not provide for any pension scheme and the same was introduced to the said Act by way of an amendment. The amendment contemplated formulation of a scheme. 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 EPS and 3.67% to the EPF.
However, the 8.33% EPS contribution is capped at the maximum wages of Rs.15,000/ p.m. even when the employee draws a higher salary. The cap of Rs.15,000/- on the EPS contribution was introduced in 2014 through an amendment to the EPS. Before the EPS amendment in 2014, employees had the option to choose higher EPS contribution amounts.
What is the EPF higher pension scheme?
In 1995, the Government...