Whether to choose the Old EPS option or new EPS.

There is a common query among clients seeking our view on whether to choose the Old EPS option or new EPS.

In the last budget announcement, there was an increase in the contribution of wages towards EPS.

 Eligible employee can now increase their pension contribution from INR 1,250 pm to 8.33% of monthly basic salary. If employee exercises this option, the change will be retrospective from the date of higher contribution

This will enhance the EPS (employee pension scheme) contribution more and hence the salaried class employee would be eligible to get higher pension during the post-retirement period. This is a one-time process and cannot be reversed. 

In the old EPS, one can contribute maximum of 3.66% of the EPF amount towards the EPS.

 This helps the salaried class people to get higher commutation during the retirement. 

We are of the opinion that locking money now with an unknown return on pension is not advisable. Hence it is advisable to continue with the Old EPS Option.

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