Maximizing Your EPF Pension A Comprehensive Guide

How to opt for higher pension in epf


Planning for retirement is a crucial aspect of financial stability, and the Employees’ Provident Fund (EPF) plays a significant role in securing a comfortable post-retirement life for employees in India. While EPF is a mandatory savings scheme for most salaried individuals, there are ways to optimize your EPF contributions to ensure a higher pension. In this article, we’ll explore various strategies and options to help you maximize your EPF pension.

Understanding the EPF

The Employees’ Provident Fund (EPF) is a retirement savings scheme in India. Both employees and employers contribute a percentage of the employee’s salary to the EPF account. The total contribution consists of 12% of the employee’s basic salary and dearness allowance, with an equal amount contributed by the employer. While this corpus helps build a financial cushion for retirement, the pension component is often overlooked.

Here’s how to make the most of your EPF to secure a higher pension

Begin Early

The key to building a substantial EPF corpus and securing a higher pension is to start early. The power of compounding works wonders when you allow your investments to grow over time. By contributing consistently from the beginning of your career, you can ensure a more substantial retirement corpus.

Ensure Full EPF Compliance

Make sure your employer deducts and deposits the EPF contributions regularly. Check your monthly payslip to verify that the correct amount is being deducted. Timely contributions not only safeguard your future but also help you gain interest on your accumulated balance.

Maintain a High Basic Salary

Your EPF contributions are directly linked to your basic salary. To maximize your EPF contributions, negotiate for a higher basic salary component when discussing your compensation package with your employer. A higher basic salary leads to higher EPF contributions, which ultimately result in a higher pension.

Use Voluntary Provident Fund (VPF) Option

The EPF allows employees to contribute more than the mandated 12% of their basic salary voluntarily. This additional contribution can be made through the Voluntary Provident Fund (VPF). By opting for VPF, you can increase your total EPF contributions, which, in turn, will lead to a higher pension.

Stay Informed About Contribution Ceilings

The EPF has certain limits on the maximum amount that can be contributed towards it. As of my last knowledge update in September 2021, the maximum contribution limit was set at ₹1.5 lakh per year. It’s crucial to stay updated with the latest contribution limits, as any amount contributed beyond this limit will not be eligible for pension calculation.

Complete the Required Service Period

To be eligible for the pension, you must complete a minimum of ten years of service. Ensure that you stay employed for this duration with EPF contributions continuously being made. Even if you switch jobs, try to transfer your EPF account rather than withdrawing the balance, as this will help maintain your service continuity.

Understand Pension Calculation

The pension amount you receive is determined by a formula that considers your average monthly salary and the number of years you’ve contributed to the EPF. The average salary is calculated based on the highest earning 60 months of your service. The pensionable service period is limited to a maximum of 35 years. Therefore, staying in service for a more extended period and drawing a higher salary during your working years will lead to a higher pension.

Opt for the Pension Scheme

While the EPF offers a lump sum withdrawal option, it’s advisable to opt for the pension scheme, which provides a regular income stream post-retirement. To do this, you should not withdraw the full EPF balance when changing jobs. Instead, fill out Form 10C and Form 19 to retain your pension benefits.

Keep Nomination and KYC Updated

Ensure that your nomination and Know Your Customer (KYC) details, such as Aadhar, PAN, and bank account, are updated in your EPF account. This ensures a smooth process for receiving your pension benefits.

Consult a Financial Advisor

Navigating the intricacies of EPF and pension calculations can be challenging. It’s advisable to consult a financial advisor who specializes in retirement planning. They can help you understand the best strategies to maximize your EPF pension while considering your individual financial goals.

Frequently Asked Questions

How can I select a higher pension option in EPF?

Employees seeking to apply for a higher pension must visit the EPFO Unified Member portal and click on the option ‘Pension on Higher Salary. Today is the last date to apply for a pension on a higher salary. However, there is still a lot of ambiguity about applying for and receiving a higher pension.

What is the formula for a higher pension scheme?

At present, it is calculated as pension = pensionable salary (average of last 60 months’ salary) x number of years of contribution / 70.


The Employees’ Provident Fund (EPF) is a valuable tool for building a secure retirement future. By following the strategies mentioned above, you can optimize your EPF contributions and ensure a higher pension after retirement. Remember that early planning, consistent contributions, and staying informed about the latest rules and regulations are essential to make the most of your EPF benefits. Secure your financial future by making informed choices today, and enjoy a comfortable retirement tomorrow.

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