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Have you ever wondered how much the PF money deducted from your salary each month will translate into a pension upon retirement? If not, this news is for you. Nearly 70 million people in the country are members of the Employee Provident Fund (EPF), but most don't know how much pension they will receive after retirement and how it's calculated. A portion of the EPF goes into the Employee Pension Scheme (EPS), which provides a fixed monthly pension after retirement.

What is the pension formula from EPF?
Under the Employees' Provident Fund Organization (EPFO) pension scheme, 8.33% of your employer's 12% contribution is transferred to the EPS. However, this amount doesn't apply to your entire salary. Since September 2014, a contribution limit has been set for EPS; a maximum of ₹1,250 per month can be deposited into your pension account.

If your employer's contribution exceeds this amount, the amount is transferred to your EPF account. This means your pension amount is determined based on this limited contribution, not your entire salary.

Who will not receive the benefits of EPS?
Not every EPF member receives the benefits of EPS. If you joined EPF after September 2014 and your basic salary is more than Rs 15,000 per month, you will not receive the benefits of EPS. In such a case, your employer's entire contribution is transferred directly to your EPF account. This means that employees starting a new job or earning high salaries will not be eligible for this scheme.

How much pension can you receive?
The pension amount under the EPS scheme depends on your service tenure and average monthly salary. However, making a higher contribution doesn't make a significant difference to your pension, as the government has set the EPS contribution limit at ₹1,250 per month.

According to current rules, the minimum pension under EPS is ₹1,000 per month, and the maximum pension is ₹75,000 per month.

Will all your EPF deposits be converted into a pension?
Many people think that all their EPF deposits will be converted into a pension, but the reality is different. Pension is only available from the EPS portion, and that too for a limited amount. If you understand this system, you can make better decisions in retirement planning and know how much savings you need along with your pension.

EPF is not just a savings source, but also your lifeline after retirement. However, it's important to understand its rules so you can know how much pension you will receive each month. Therefore, if you are employed, check your EPF and EPS status today.

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