If you are either a retired employee or someone is working as an employee, then you might have registered yourself through your organization for the EPF scheme. In simple terms, EPF is an Employee Provident Fund launched in 1995 where 12% of employee basic salary is deducted every month as part of EPF scheme.
It means that every month for the years you work you will pay a 12% basic salary to the EPF scheme which will be returned to you with interest after your retirement. I know you might have a lot of questions on the pension contribution in EPF and what early retirements means. We will be discussing these in the article below.
What is Pension Contribution in EPF?
In India, the EPF scheme takes 12% of the basic salary of employees as part of the pension scheme with 8.33% going towards the pension scheme and 3.67% going towards the EPF account.
So basically you are investing a total of 8.33% of your basic salary towards your pension scheme under the EPF scheme. After your retirement you will be paid a monthly pension of your basic salary 12% contribution plus any interest that might have occurred during your EPF scheme duration before retirement.
Also, this does not mean that only the employee has to contribute towards the pension scheme in EPF. Both the employer and employee contribute, whereas the employer’s contribution is generally higher than the employee’s contribution and this may shown on EPF passbook.
- How much is the pension contribution in the EPF?
The current pension contribution rate for EPF in India is 8.33% of an employee’s salary.
- How is the pension contribution in EPF calculated?
The pension contribution is calculated as a percentage of an employee’s salary. The current rate is 8.33% of an employee’s salary.
- Can an employee opt out of making pension contributions in EPF?
No, it is mandatory for both the employer and employee to make contributions to the EPF pension scheme as per the rules and regulations of the government of India.
- How can I check my EPF pension contribution?
You can check your EPF pension contribution by logging into the EPFO portal using your UAN and password. You can also check your contribution statement by visiting your respective regional office of EPFO.
- How are EPF pension contributions used?
The pension contributions made by employees and their employers are used to provide retirement benefits to employees when they reach the age of 58 or 60 years.
- Is there any tax benefit on EPF pension contributions?
Yes, contributions made to the EPF pension scheme are eligible for tax deductions under Section 80C of the Income Tax Act.