EPS or the Employee Pension Scheme will soon get an option wherein voluntary contribution towards the EPS by employees will be made available, according to the latest information from the EPFO.
The voluntary contribution is in addition to the mandatory contribution which is already made by the employer. Currently, the employer contribution towards EPS is 8.33% on the Basic wages i.e, 15,000.
The threshold limit for deduction of EPS contribution is if the monthly basic wages is Rs 15,000. Therefore, the maximum amount that can be contributed towards a pension account is be Rs 1250 per month. On this, a government subsidy of 1.16% of basic wages i.e, Rs 174 will contributed as well. So the total maximum amount that can be contributed is Rs 1,424 which is deducted even if the employee has basic wages more than the threshold.
Explaining the move further, an official has stated that since EPS is not linked to inflation, it remains stagnant after retirement. For this reason employees should be able to contribute voluntarily towards the pension scheme.
The proposal to provide EPS voluntary scheme is being considered by the EPFO’s board of trustees. Once it has been approved, employees will have the option to contribute towards the EPS voluntarily.