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Employees' Provident Fund Organisation offers pension benefits to subscribers under the Employees' Pension Scheme, ensuring financial security during retirement. While EPF subscribers become eligible to apply for pension on superannuation at the age of 58 years, opting to defer this until the age of 60 can yield a higher pension.
Benefits Of Delaying Pension Until 60
EPF pension rules stipulate that employees can start receiving their pension at the age of 58, provided they have contributed to the EPF scheme for at least 10 years. However, if subscribers choose to delay their pension until they turn 60, they are entitled to an increase in their pension amount.
Specifically, deferring pension till the age of 60 could fetch an additional 8% more pension, compared to the amount to be received at the age of 58 years.
For those who choose to claim their pension at 59, an extra 4% is added. By waiting until the age of 60, the total pension increases by 8%, which can be a significant advantage for post-retirement years.
In a recent video, the EPFO explained pension benefits, eligibility, and calculation methods:
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How EPFO Contributions Work?
Under the EPFO system, both employees and employers contribute 12% of the employee's basic salary plus dearness allowance into the provident fund. Of the employer’s contribution, 8.33% is directed towards the Employees' Pension Scheme, while the remaining 3.67% is added to the Employees' Provident Fund.
Eligibility And Withdrawal Rules
EPFO subscribers become eligible for pension on superannuation at the age of 58. They must have at least 10 years of contribution to the scheme. For subscribers with less than 10 years of service, there is the option to withdraw the pension contributions instead of waiting for retirement benefits.
Additionally, employees who reach the age of 50, and have at least 10 years of service are eligible to begin receiving a reduced pension. However, choosing to continue working and contributing to the EPF scheme until the age of 60 allows employees to get the benefits of higher pension payouts.
The EPFO's offer of higher payout for those delaying their pension until the age of 60 is designed to encourage longer contributions, ensuring a large retirement corpus for employees. By remaining in the workforce beyond 58 years of age and continuing to the EPF scheme, individuals can improve their post-retirement financial security.
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