EPFO announces formula for calculating higher pension

Kozhikode: The Employees’ Provident Fund Organisation (EPFO) has released the formula for computing the higher pension.

As per the latest circular, the pension of those who retired before September 1, 2014 will be based on their average salary of 12 months prior to their retirement.

For those who retired after this date, the pension will be calculated on the basis of their average salary of 60 months immediately before superannuation.

Currently, pension amount is arrived at by multiplying the average salary by the years of service and dividing the result by 70.

Earlier, the EPFO had released several statements which said that the formula for calculating the pension would be announced in a circular. This had caused apprehension among employees over whether the formula would be changed. However, the latest circular reveals that the formula remains unchanged.

Four points to note

Field offices of EPFO have been directed to ensure the following procedures while considering the applications for higher pensions:
The employer should pay the proportional PF contribution for salary above the limit set by EPFO till the retirement of the employee.
The administration charges to be submitted by the employer have to be paid for pension contribution for higher salary also.
An amount proportional to the higher salary has to be credited in the PF account of the employees. Interest should be paid for this amount.

One among the following documents should be attached to the application for pension instead of Option 26(6): Salary details of employee; salary slip; application submitted jointly with employer or the letter issued by PF office before November 4, 2022 approving credit of higher amount in PF.

The latest circular also says that if an application follows all the above conditions, Option 26(6) could be submitted through the employer before a final decision is taken on the pension, even if the applicant did not produce proof of giving Option 26(6) earlier.

According to the circular, it covers employees working in institutions belonging to the exempted category also.

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