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EPFO Pension: For employees working in the private sector, the thought of retirement often brings lines of worry on their forehead. Unlike a government job, there is no fixed or tied pension here, so it is natural to fear about financial security in old age. But, if you come under the purview of Employees Provident Fund Organization (EPFO) and your PF is deducted every month, then it can remove your big worry. EPFO's EPS Scheme is no less than a strong support for the private sector employed people. If you are planning to retire in the year 2026, then it would be wise to understand now how much amount you will get as pension every month after your job ends.

A small part of salary becomes a big support

Often people think that PF deduction is just a kind of savings, but its mathematics is a little different. When money is deducted from your salary every month, a part of it is deposited in your Provident Fund (EPF). Whereas, the second part is deposited on behalf of your company or employer. A large part of the company's contribution goes directly into the Employees' Pension Scheme (EPS). This is the money which is gradually accumulated during the job and after retirement you get it in the form of pension. However, there are some conditions to avail its benefits. To become eligible for pension, it is mandatory for an employee to complete at least 10 years of service (pensionable service). Generally, full pension is available at the age of 58 years.

Calculate your pension like this

You do not need to go to any CA to know your pension. You can estimate this yourself using a simple formula decided by EPFO. The formula is: (Pensionable salary × total years of service) / 70.

There is a technical problem here which is very important to understand. According to EPFO ​​rules, your maximum salary limit (Basic Salary + DA) for calculating pension has been fixed at Rs 15,000 per month. This simply means that even if your basic salary is in lakhs, the pension will be calculated on the basis of Rs 15,000 only. Here 'years of service' means the years for which you have contributed to the EPS account.

How much will you earn on retirement in 2026?

Let us understand this entire mathematics with an example. Suppose Kanhaiya is an employee, who is going to retire in the year 2026. For example, let us assume that the period of his total employment or contribution to EPS till that time is 50 years. Since the maximum salary limit for pension calculation is fixed at Rs 15,000, Kanhaiya's pension will be made like this: 15,000 (salary) × 50 (years) ÷ 70 = Rs 10,714 (approximately).

According to this, Kanhaiya will get a pension of about Rs 10,714 every month after retirement. But age is also at play here. If Kanhaiya does not wait till he completes the age of 58 years and starts taking pension from the age of 50, he will suffer loss. According to the rules, they will get 4% less pension every year.