EPFO Pension Update 2025: What You Need to Know About Gaps in Service & Increased Benefits!
Thinking about your retirement is a big deal, and for many, the Employees’ Provident Fund Organisation (EPFO) pension scheme is a crucial part of securing that future. The EPFO’s Employees’ Pension Scheme (EPS) 1995 is designed to provide a regular income after retirement, offering financial security in your later years. But what happens if you’ve had some breaks in your career? Does that mean you won’t qualify for the 10-year minimum service requirement? What about the recent changes? Let’s break it down.
The Big Question: Do Career Breaks Impact Your EPFO Pension?
One of the biggest concerns for many job seekers is whether career breaks or changing jobs can jeopardize their eligibility for the EPS. Good news! You don’t necessarily need 10 years of continuous service to qualify for a pension. According to EPFO rules, your previous service will still be counted even if you’ve taken a break, as long as you’ve used your Universal Account Number (UAN) in your new jobs. This is super important! Your old and new service periods will be combined, meaning that gaps in between jobs won’t be counted against you for the overall service period.
Think of it like this:
Imagine you worked at a company for 5 years, then took a year off, and then worked at another company for another 5 years. In this case, your total service will be counted as 10 years. The one-year gap won’t be counted, but your previous service continues to be added to your account, assuming you transferred your UAN.
EPFO Pension 2025: What’s New?
There have been some recent and significant updates to the EPFO pension scheme in 2025. Here’s a quick rundown:
-
Increased Minimum Pension: The government has increased the minimum monthly pension to ₹7,000.
- Dearness Allowance (DA): Pensioners will also receive Dearness Allowance (DA), which means the pension amount will increase over time periodically.
These changes bring much-needed relief to millions of pensioners.
EPFO Pension Eligibility 2025:
Here’s who can benefit from the EPFO pension scheme:
- Age Requirement: The employee must be at least 58 years old.
- Service Requirement: Must have completed at least 10 years of service under EPS, even with gaps.
- EPFO Membership: The employee must be a registered member of EPFO.
- Regular Contributions: Must have made regular contributions to EPS.
- Extra Benefit: If the service is longer than 20 years, you get an extra 2 years of service benefit.
Navigating Job Gaps: How Service Gets Added Up
Here’s how your pension service gets counted when you have a job gap:
- Keep Using Your UAN: Always provide your old UAN number when you join a new job.
- Contributions Stay Together: Your new company will deposit your EPF/EPS money into the same account.
- Service is Combined: Your old and new service will be merged.
- Gaps Don’t Count Against You: The years you were not working don’t count, but the years you did work will.
- Example: If you work for 5 years at one company, take a 2-year break, and then work for another company for 5 years, your service is counted as 10 years.
Understanding The Pension Calculation Formula
So how does the EPFO calculate your pension amount? Here’s the formula:
Monthly Pension = (Pensionable Salary x Total Service)/70
Where:
- Pensionable Salary: The average of your basic salary + DA for the last 60 months of employment.
- Total Service: The total number of years you worked across all companies (excluding gaps).
A Simple Example:
Let’s say an employee’s average salary for the last 5 years is ₹15,000 and they have worked for a total of 12 years, in that case:
Monthly Pension = (15,000 x 12) / 70 = ₹2,571
What Has Changed Now?
- ₹7,000 Minimum Pension: The minimum monthly pension has been set at ₹7,000.
- Dearness Allowance (DA): You will also get a DA that increases based on CPI every 6 months.
- Millions Benefit: Over 6.5 million pensioners will get the benefits.
- Applies From April 2025: The pension increase takes effect from April 2025.
By keeping your UAN active when changing jobs, you will easily be able to make use of this pension scheme and lead a blissful life after retirement.