Calculate Your Retirement Income: Understanding the EPFO Pension Formula

EPFO Pension Calculator: A formula determines how much pension you'll get from EPFO after retirement. It also considers the duration of your service. Here's how to calculate your potential pension.

Retirement Planning

If you're a salaried employee contributing to the Employees' Provident Fund every month, you should know how your pension is calculated. If you've contributed to your EPFO account for 10 years, you're entitled to a pension after retirement. You can calculate how much pension you'll get using a formula.

EPFO rules

The total service period is considered in the EPFO pension calculation. To get the maximum pension, you must have contributed for 35 years. Now, what's the formula that determines how much pension you'll get after retirement? Let's see how to calculate the monthly pension amount using it.

EPFO Pension Calculator

The formula for calculating the pension received from EPFO is: Average Salary x Pensionable Service Period / 70. Here, the average salary is the basic salary + dearness allowance. This is calculated based on the last 12 months' salary. To get the maximum pension, the service period must be at least 35 years. The average salary should be at least ₹15,000.

EPFO Pension formula

How is the EPS pension calculated for maximum contribution and years of service? 15000 x 35 / 70 = ₹7,500. In this way, a maximum of ₹7,500 pension can be received from EPS. Whereas the minimum pension can be up to ₹1,000. You can also calculate your pension amount using this formula.

EPFO Pension

12% of the basic + dearness allowance of employees working in the organized sector is deposited in EPF every month. The same amount is also deposited by your company. But the company's share is divided into two parts. 8.33% goes to the Employee Pension Scheme (EPS) and 3.67% goes to EPF every month.

Employee Pension Scheme

Under EPS rules, an employee is entitled to a pension at the age of 58. However, if they wish, they can get a pension before the age of 58. For this, there is an option called early pension. Under this, a pension can be obtained after 50 years. But in this case, the sooner you withdraw the money from the age of 58, the lower the pension you will get, i.e., 4 percent per year.