EPF Higher Pension Calculator

If you are eligible for higher pension and your organization has shared with you the amount (principal and interest) that you need to deposit to get the higher pension amount, then this calculator can help you take the decision. I hope you would have gone through my detailed post and video on Whether you should switch to higher pension or not?

You will find the calculator at the bottom of the page, Make sure you read all the instructions carefully. The calculator has been divided into 2 sections:

Section 1

First section looks like below:

1. Amount 1 to be Deposited (8.33%) – Editable – This is the amount you need to fill from the Summary (8.33%) Sheet of Pension Refund Calculator Excel.
2. Amount 2 to be Deposited (1.16%) – Editable – This is the amount you need to fill from the Summary (1.16%_Mem) Sheet of Pension Refund Calculator Excel.
3. Last 60 Months Average Salary – Editable – Calculate the average wage of last 60 months from Wage Entry sheet of Pension Refund Calculator Excel.
4. Number of Years of Pensionable Service – Editable – Enter the number of years of your Pensionable Service.
5. Effective Pensionable Service – Non Editable – This is a calculated field. In case the value of Pensionable Service is 20 years or more, it add 2 additional years.
6. Original Pension Amount – Editable – This is the amount of Pension you will receive if you don’t choose the Higher Pension option. While the form automatically calculates the amount basis certain assumption, you can change it as well.
7. Higher Pension Amount – Editable – This is the amount of Pension you will receive if you do choose the Higher Pension option. This is calculated based on Pensionable Salary and Pensionable Service.
8. Assumed Rate of Return – Editable – This is the rate of return you can get on your Bank Fixed Deposits or the Returns being given by Annuity Plan Providers (Please note that its assumed that you will be consistently be able to generate returns at this rate throughout your lifetime).

Section 2

Second Section looks like below:

1. Extra Deposit to be made – Calculated but Editable – This is the total of Extra Amount to be deposited to avail higher pension amount. This will be automatically be calculated based on the values you have entered in the previous sections. However, if you have been asked to deposit a lumpsum amount, you can fill that value in this field directly overwriting previously calculated value.
2. Difference in Pension – Calculated but Editable – This is the difference of Pension between the Original Pension Amount and the Higher Pension Amount. This will be automatically be calculated based on the values you have entered in the previous sections. However, if you have been not told what the previous and old pension amounts are, you can put the value directly in this field.
   Note: In case you manually enter a value in this field, the calculations may not be totally correct as we don’t know what the original pension amount was.
3. You will achieve Breakeven in (Months) – Calculated and non editable – Basis all the inputs that you may have entered, the calculator will determine how many months will your corpus last if you choose to keep the extra amount with you, invest it in a Fixed Deposit account giving you the assumed rate of return and by withdrawing the amount equivalent to difference in Pension amount.
   Note – If the value for this field is coming as blank, it means that you will never exhaust corpus and in that case you should ideally not opt for higher pension.
4. Immediate Annuity Plan with 100% RoP (Monthly) – This is the approximate amount you can expect if you are planning to take an Immediate Annuity Plan with 100% Return of Premium Option.

Click to expand

Example:

Let’s understand this with the help of the example in the screenshots.

Assume that you have been asked to deposit 8.33% amount of ₹10,00,000 and 1.66% amount of ₹80,000 in case you wish to avail the higher pension amount.

Let us also assume your Number of Pensionable Service is 14 and Average of Last 60 Months Salary is ₹75000.

Now, If you deposit this extra amount of ₹10,80,000 you will be able to get the revised higher pension amount of ₹15,000 as compared to an old pension amount of ₹3,000.

This means that by paying ₹10,80,000, you will be able to generate extra income of ₹12,000

Now, let’s say that you choose to not deposit ₹10,80,000 with EPFO and instead keep it with yourself and invest it in a bank or an annuity plan at an interest rate of 6.5%.

So under Case 1, if you are keep on withdrawing the excess pension amount of ₹12,000 on a monthly basis, then your entire corpus of ₹10,80,000 will last only around 124 months. However the entire amount of ₹10,80,000 will move to government and is not recoverable. Should something happen to you, your spouse will only get 50% of pension.

No TDS or any other Tax related calculations have been taken into account.

Under Case 2, assume you have taken an annuity plan with 100% RoP. Now the investment of ₹10,80,000 will give you an approximate monthly annuity amount of ₹5850. After your death, your spouse will continue to get entire pension amount. And after spouse death, the entire Principal amount will go to your nominee.

Click here to WHATSAPP if you want to know more about IMMEDIATE ANNUITY PLAN

Before using the calculator, make sure you have checked that you fulfil the eligibility criteria for Higher Pension as prescribed by EPFO.

Once you have determined that EPF Higher Pension scheme is beneficial for your, you need to go to EPF website and fill the Joint Option Application form online.

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