Showing posts with label Salary. Show all posts
Showing posts with label Salary. Show all posts

Wednesday, April 25, 2012

Understanding EPS - Employee Pension Scheme

If you have looked at your EPF (Employees’ Provident Fund) details you might have wondered about deduction of Rs. 541 per month from your company’s (employer's) contribution to EPF.


Here is the explanation:

• Every month you need to contribute 12% of your basic salary to your EPF account

• Your employer also needs to contribute 12% of your basic to your EPF account. But this part is split into two -

• EPS (Employee Pension Scheme) – 8.33% of your basic salary goes towards EPS, subject to a maximum of Rs. 541 (i.e. 8.33% of Rs. 6,500)

• The rest of the amount goes into the EPF account.

EPF & EPS Calculation:

Here is an example of how EPF & EPS is calculated:

Suppose your basic salary Rs. 10,000 per month.

• 12% of basic is deducted from salary i.e. 12% of 10,000 = Rs. 1,200

• 12% of basic is contributed by employer i.e. 12% of 10,000 = Rs. 1,200

• Total contribution to EPFO = Rs. 2,400

• Out of total Rs. 2400, Rs. 541 goes towards EPS (Employees’ Pension Scheme) and the rest i.e. (2,400 – 541) = Rs. 1,859 goes towards EPF account.



Since the basic salary is more than Rs. 6,500, only 8.33% of Rs. 6,500 (i.e. 541) is contributed to EPS.

What is EPF & EPS?

First lets talk about the similarity between both – EPF & EPS. Both are Retirement Schemes compulsory for private company employees (employers with more than 50 employees) and are managed by EPFO (Employees’ Provident Fund Organisation). In case of EPF you get certain percentage interest on your deposits, which are decided by EPFO board every year. Whatever is the amount accumulated in this EPF account by the time you retire, you receive that as a lump sum.

In case of EPS, you get a monthly pension after you retire which is based on a formula. The good thing about this pension is, your spouse/dependents continue to get this monthly pension even after your death subject to certain conditions.

How much Monthly Pension under EPS?

The next logical question is how much pension would you get under EPS scheme? It’s based on a formula:

Monthly Pension = (Pensionable salary X Pensionable service) / 70

• Where Pensionable salary is average of last 12 months basic salary with an upper cap of Rs. 6500 and

• Pensionable service is the tenure of your contribution to EPS.

Calculating Monthly Pension Amount:

For e.g. you join a private sector company at the age of 25 and continue working there till retirement at the age of 60; with your basic salary always exceeding Rs 10,000 per month. Here is what your monthly pension amount would be:

Pensionable salary = Rs. 6,500 [even though your basic salary is Rs. 10,000 but there is an upper limit of Rs. 6,500]

Pensionable service = 60 – 25 = 35 Years

So, Monthly Pension Amount = (6500 x 35) / 70 = Rs. 3,250

You would receive this amount of Rs. 3,250 as your monthly pension for your life time and this would continue even after your death to your dependents.

This brings us to the next question –

Is EPFO justified in paying such a small pension for your contribution of Rs. 541 per month for 35 years?

Let’s do some number crunching and get the answers.

Had your contribution not gone compulsorily into EPS, it would have gone to your EPF (or VPF) account and paid to you in bulk at the time of retirement. Assuming a rate of interest of 8.5% for entire tenure of EPF, the monthly contribution of Rs. 541 for 35 years (or 420 months) would grow to Rs.14,14,147.

You can withdraw this amount and invest in annuity options available with Insurance companies for regular income. Such an investment would give much better returns than this monthly pension of Rs 3250 PM in the given example.


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Monday, February 2, 2009

Satyam pays Salaries

Satyam Computer services Limited which is in middle of crisis paid salaries to all its empolyees.This was not covered in any news paper or Tv channel.This once again proves that media covers oonly news which creates tensions.

Satyam also gave employees salaries as per schedule.There were no reductions etc.
So this proves media created rumors like employees will not get salary for 2 months etc.

Tuesday, April 15, 2008

HOW TO ASK YOUR BOSS FOR A SALARY INCREASE..?

One day an employee sends a letter to his boss asking for an increase in his salary !!!



Dear Bo$$


In thi$ life, we all need $ome thing mo$t de$ perately. I think you $hould be under$tanding the need$ of u$. We are worker$ who have given $o much $upport including $weat and $ervice to your company ..
I am $ure you will gue$$ what I meant and re$ pond $oon .



Your$ $incerely,

Ajay Kumar.


The next day, the employee received this letter of reply :




Dear Ajay,
I kNOw you have been working very hard. NOw a days, NOthing much has changed. You must have NOticed that our company is NOt doing NOticably well . NOw the newspapers are saying the world's leading ecoNOmists are NOt sure if the United States may go into aNOther recession. After the NOvember presidential elections things may turn bad . I have NOthing more to add NOw. You kNOw what I mean .


---- Your Boss.

Monday, March 31, 2008

HR and Salary Hike by hareesh

After 2 years of selfless service, a man realized that he has not been promoted, no transfer, no salary increase no commendation and that the Company is not doing any thing about it. So he decided to walk up to his HR Manager one morning and after exchanging greetings, he told his HR Manager his observation. The boss looked at him, laughed and asked him to sit down saying;

Myfriend, you have not worked here for even one day.
The man was surprised to hear this, but the manager went on to explain.

Manager:- How many days are there in a year?

Man:- 365 days and some times 366

Manager:- how many hours make up a day?
Man:- 24 hours

Manager:- How long do you work in a day?
Man:- 8am to 4pm. i.e. 8 hours a day.

Manager:- So, what fraction of the day do you work in hours?
Man:- (He did some arithmetic and said 8/24 hours i.e. 1/3(one third)

Manager:- That is nice of you! What is one-third of 366 days?
Man:- 122 (1/3x366 = 122 in days)

Manager:- Do you come to work on weekends?

Man:- No sir

Manager:- How many days are there in a year that are weekends?
Man:- 52 Saturdays and 52 Sundays equals to 104 days

Manager:- Thanks for that. If you remove 104 days from 122 days, how many days do you now have?
Man:- 18 days.

Manager:- OK! I do give you 2 weeks sick leave every year. Now remove that14 days from the 18 days left. How many days do you have remaining?
Man:- 4 days


Manager:- Do you work on New Year day?
Man:- No sir!

Manager:- Do you come to work on workers day?
Man:- No sir!

Manager:- So how many days are left?
Man:- 2 days sir!

Manager:- Do you come to work on the (National holiday )?
Man:- No sir!


Manager:- So how many days are left?
Man:- 1 day sir!

Manager:- Do you work on Christmas day?
Man:- No sir!

Manager:- So how many days are left?
Man:- None sir!

Manager:- So, what are you claiming?
Man:- I have understood, Sir. I did not realise that
I was stealing Company money all these days.

Moral - NEVER GO TO HR FOR HELP!!!
HR=HIGH RISK