EPS 95 – HIGHER PENSION VS EPF – COMPARATIVE ANALYSIS

AUTHOR :ANITA BHADRA

 

Reference my article EPS 95 – Eligibility for higher Pension Part I & EPS 95 – Eligibility for higher Pension Part II dated 05.01.2023 & 04.02.2023 respectively.

 

The last date to exercise the option as prescribed vides Supreme Court Judgment dated 04.11.2022 is fast approaching. Employers have circulated option Forms to the employee and there is a lot of confusion among employees about whether to opt for a higher pension or not.

 

Let us try to understand the calculation with the help of the Case study. Ms. Neeta who is due for retirement on 30th June 2024 could manage to extract records from Nov 1995 onwards. The details available and calculation thereof is brought out in tabular Form for better understanding and clarity.

 

1. Details Available

 

 

1. Date of Retirement                                                                            30 June 2024

 

2. Pensionable Service                                                                           30 Years
3. Average Salary (Basic+DA) for the last 60 months                          Rs. 1,94,000
4. Actual Salary Received/ Receivable (Nov1995 – June 2024)           Rs. 2,64,96,009
5. Total Employer Contribution ( 12% * 1(d))                                      Rs. 31,79,521

 

2. Pensionable Salary & Contribution to EPS (if not opted for higher Salary)

 

(Rs.) Contribution Contribution(Rs.) 2(a) 2(b) 2(c ) 2(d) 2(e) 2(f)= (2(c)*2(e) (i) Nov1995- Sep 2001 71 5000 417 29,607 (ii) Oct 2001 – Aug 2014 155 6500 542 84,010 (iii) Sep 2014 – June 2024 118 15000 1250 1,47,500 (iv) TOTAL       2,61,117

Sl            Period                                           No. of months Pensionable      Salary Monthly       Pension Total

 

 

3. Pension Calculation

 

 

Sl              Exercise of Pensionable Salary (Rs.)      Pension Calculation Option

 

3(a)	3(b)	3(c )	3(d)
3(i)	Opted	1,94,000	1,94,000*32/70
3(ii)	Not Opted	5000/6500/15000	{(5000*71/12)+(6500*155/12)+(15000*120/12)}/70

3(iii)          Difference in Pension

Note: Two years additional is to be considered for service of more than 20 years

 

 

 

 

 

4. Amount to be diverted to EPS from EPF :

Sl             Exercise of Option                 Actual Salary             Total EPF                  Diverted to EPS                Diverted to                             B

 

 

 

4(ii)         Not Opted                              2,64,96,009                31,79,521                   Refer 2a(iv)                2,61,117

4(iii)        NET AMOUNT TO BE DIVERTED TO EPS FROM EPF IF OPTED FOR HIGHER PENSION

 

 

5. EPS VS. EPF –MONTHLY INFLOW

 

Exercise           of Balance in EPF at Monthly      income

 

retirement FD @ 5%)   5(a) 5(b) 5(c ) 5(d) 5(e) 5(f)=5(d)+5(e) 5(i) Opted 9,72,403 4052 88,686 92,738 5(ii) Not Opted 29,18,404 12,160 3,765 15,925

Sl            Option

the        time         of (assuming    put    in Monthly Pension      Total Inflow

 

7. It can be concluded the higher pension scheme is beneficial for those who are retired or likely to be retired in another 10-12 years.

 

Disclaimer: The article is for educational purpose only. This calculation and analysis may be right or wrong. To the best of my limited understanding, I have tried to do calculations and analysis. Comments & suggestions for corrections are welcome.

 

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