Respected Experts and Mentors,
Need help on this: My uncle is 58 years old and retired. He wants to opt for a higher pension scheme. His working tenure is 15 years (till 2023) with an average basic salary of 100,000 (1 lac). If he chooses a Higher EPS, how much pension will he receive? What are the advantages and disadvantages? Also, how much pension per month could he receive if he does not choose a higher pension?
Thank you.
From India, Mumbai
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Need help on this: My uncle is 58 years old and retired. He wants to opt for a higher pension scheme. His working tenure is 15 years (till 2023) with an average basic salary of 100,000 (1 lac). If he chooses a Higher EPS, how much pension will he receive? What are the advantages and disadvantages? Also, how much pension per month could he receive if he does not choose a higher pension?
Thank you.
From India, Mumbai
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Dear User,
Based on your uncle's circumstances, let's break down his pension calculation and the advantages and disadvantages of choosing a higher pension scheme:
1. 💼 Pension Calculation: Under the Employee Pension Scheme (EPS) in India, the pension is calculated as: (Pensionable Salary x Pensionable Service) / 70
Given that your uncle's average basic was 1 lakh, and his service tenure is 15 years, this would be: (100,000 x 15) / 70 = INR 21,428.57 per month
If he opts for a higher pension by contributing on his full salary (instead of the statutory limit), his pensionable salary would increase, and consequently, his monthly pension.
2. 🌁 Advantages of Higher EPS Scheme:
- Higher Monthly Pension: Since the contribution to EPS is on the full salary, the monthly pension amount will be higher.
- Income Security: Greater financial stability and security in the post-retirement phase.
3. ❗ Disadvantages of Higher EPS Scheme:
- Higher Contribution: Opting for a higher pension means your uncle will have to make a larger contribution from his salary. This reduces his take-home pay.
- Tax Liability: Depending on the tax slab, the higher pension may attract more tax.
4. 🧆🤍 Pension Without Higher EPS: If your uncle does not opt for the higher pension scheme, then his pension would be calculated on the statutory wage ceiling, which currently stands at INR 15,000 in India. Based on this, his pension calculation would be: (15,000 x 15) / 70 = INR 3,214.29 per month
Remember, choosing between a regular pension scheme and a higher pension scheme should be done considering the financial circumstances, retirement goals, and tax implications. It is advised to consult with a financial advisor to make an informed decision.
Hope this helps your uncle in making a decision.
From India, Gurugram
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32Based on your uncle's circumstances, let's break down his pension calculation and the advantages and disadvantages of choosing a higher pension scheme:
1. 💼 Pension Calculation: Under the Employee Pension Scheme (EPS) in India, the pension is calculated as: (Pensionable Salary x Pensionable Service) / 70
Given that your uncle's average basic was 1 lakh, and his service tenure is 15 years, this would be: (100,000 x 15) / 70 = INR 21,428.57 per month
If he opts for a higher pension by contributing on his full salary (instead of the statutory limit), his pensionable salary would increase, and consequently, his monthly pension.
2. 🌁 Advantages of Higher EPS Scheme:
- Higher Monthly Pension: Since the contribution to EPS is on the full salary, the monthly pension amount will be higher.
- Income Security: Greater financial stability and security in the post-retirement phase.
3. ❗ Disadvantages of Higher EPS Scheme:
- Higher Contribution: Opting for a higher pension means your uncle will have to make a larger contribution from his salary. This reduces his take-home pay.
- Tax Liability: Depending on the tax slab, the higher pension may attract more tax.
4. 🧆🤍 Pension Without Higher EPS: If your uncle does not opt for the higher pension scheme, then his pension would be calculated on the statutory wage ceiling, which currently stands at INR 15,000 in India. Based on this, his pension calculation would be: (15,000 x 15) / 70 = INR 3,214.29 per month
Remember, choosing between a regular pension scheme and a higher pension scheme should be done considering the financial circumstances, retirement goals, and tax implications. It is advised to consult with a financial advisor to make an informed decision.
Hope this helps your uncle in making a decision.
From India, Gurugram
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