If you work in a private job and your PF is deducted every month, a question must be coming to your mind: how much pension will you receive after retirement? Many employees think that once their PF is deducted, their pension will be automatically determined. However, the actual pension amount is calculated using a fixed formula. The pension amount depends on your salary and years of service. Most employees are not fully aware of the rules and calculations of the Employee Pension Scheme (EPS). Let's learn how you can calculate your pension amount in just a minute using a simple formula.

Pension Formula under EPS
EPS is managed by the EPFO, and the government pension for private employees is determined under this scheme. The monthly pension is calculated using this formula:

Pension = (Pensionable Salary × Total Years of Service) ÷ 70

What is the minimum number of years of service required to receive a pension under EPS?

Twenty years
B Ten years
C Fifteen years
D Five years

Here, pensionable salary is your average basic salary of the last 12 months + DA. Under EPS, only a maximum salary of Rs. 15,000 is counted, even if your salary is higher. A minimum of 10 years of service is required to receive a pension. Pension begins after the age of 58. If an employee has worked for less than 10 years, they receive a scheme certificate instead of a pension, which can be added to their previous employment to form a pension.

Example: Pension calculation
If an employee's pensionable salary is Rs. 15,000 and they have worked for 25 years, the pension = (15,000 × 25) ÷ 70 = 375,000 ÷ 70 = 5,357 rupees per month.

The EPS pension is certainly a cornerstone of security for private employees, but it's by no means sufficient. To ensure a strong retirement, it's important to consider options like NPS, mutual fund SIPs, and company pension plans.

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