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Deadline for Opting for Higher Pension Extended to June 26: FAQs

(EPFO) has extended the deadline for choosing the higher pension option

In this insightful blog post, Ashton Gray sheds light on the extended deadline for opting for a higher pension and guides readers through the intricacies of this crucial decision. Unveiling the FAQs surrounding the higher pension option, the blog offers a comprehensive understanding of its implications and the necessary steps to be taken. With expert insights, Ashton Gray ensures readers are well-informed, making it a must-read for those contemplating their pension choices

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The Employees’ Provident Fund Organisation (EPFO) has extended the deadline for choosing the higher pension option to June 26. This option allows eligible members to receive a higher pension based on their actual salary rather than the statutory wage ceiling. If you’re considering this option, here are some key points to keep in mind.

What does the higher pension option mean?

Currently, the EPF contribution is calculated based on the basic salary, and a portion goes towards the employees’ pension scheme (EPS). The amount directed to EPS is calculated on the statutory wage ceiling of Rs 15,000. However, after a Supreme Court verdict in November 2022, eligible members can now opt for a higher pension calculated on their actual basic salary.

Are there any limitations to be aware of?

Choosing a higher contribution to EPS will result in a higher pension after retirement, but it will also reduce your PF corpus since the additional pension contribution will be diverted from your provident fund.

Who is eligible for a higher pension?

Employees who were members of EPFO and EPS before September 1, 2014, and who are still in service but missed availing the higher pension option earlier can apply. Those who joined the workforce after this date and earn a basic salary higher than Rs 15,000 do not need to take any action.

How do I opt for a higher pension?

Both employers and employees must submit a joint declaration to the EPFO stating their intention to opt for a higher pension. The EPFO has an online facility and format available for this purpose. Visit the EPFO’s member portal and ensure your mobile number is linked to your Aadhaar. The EPFO will review the forms and contact you if any additional information or proofs are needed.

What challenges may arise during the procedure?

There could be difficulties in transferring pension funds from previous employers and ensuring that the contributory period is accurate. Calculating the amount of funds that need to be moved from the PF account to the pension scheme retrospectively may also pose a challenge. It is recommended to have salary slips or PF account statements for all past years to assist with the calculation.

Do I need to provide proof of opting for a higher pension before September 2014?

Earlier, proof of the joint request submitted to the EPFO was mandatory. However, the Kerala High Court relaxed this requirement, and the EPFO amended the online joint option form accordingly.

What mistakes should I avoid during the online application?

Make sure all information entered is accurate to avoid procedural delays. If you have withdrawn funds from your PF account, you must agree to repay the amount plus interest to enable the EPFO to pay a higher pension. After submission, revisions are not allowed, but a one-month window may be provided for correcting errors or discrepancies.

What areas still lack clarity?

The future pension calculation formula and access to historical wage data are areas where clarity is awaited. The government can amend the pension formula, potentially resulting in lower pensions. Obtaining wage data from multiple employers may be challenging, and the validation process with the last employer is not clear.

Should I opt for a higher pension?

Deciding whether to opt for a higher pension is a personal choice. Consider factors such as life expectancy, the lack of a return of purchase price option, and the potential erosion of the pension’s value over time. Additionally, pension income is taxable, unlike the tax-free PF amount received at retirement. However, the government-backed guarantee may provide comfort to subscribers.
Keep these points in mind when making a decision regarding the higher pension option. The extended deadline allows you more time to consider the implications and make an informed choice.
If you are a retired individual seeking to generate passive income, consider Ashton Gray Investments as your ideal choice.
Ashton Gray Investments enables Indian investors to invest in the US Real Estate to earn fixed monthly incomes and up to 18% annual return on investment. Contact us today to learn more about our investment opportunity and lead a stress-free retirement life.

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