Dearness Allowance + Basic Pay for pension calculation of PSU employees: Here’s what Modi govt says

Pension calculation for PSU employees: There is no separate formula for calculating pension of retired employees of Public Sector Undertakings (PSUs) under EPS 1995, Minister of State for Labour and Employment Santosh Kumar Gangwar said in a written reply to a query in Lok Sabha on Monday. Also, the Supreme Court has not given any order to include basic pay and dearness allowance (DA) while calculating/fixing the pension of the retired employees of Public Sector Undertakings (PSUs), he added.

Gangwar’s answer came in response to a query on “whether the Hon’ble Supreme Court has issued any order to include basic pay and dearness allowance while calculating/fixing the pension of the said retired employees and if so, the details thereof.”

The minister replied: “There is no such order of the Hon’ble Supreme Court of India to include basic pay and dearness allowance while calculating/fixing the pension of the retired employees of Public Sector Undertakings (PSUs).”

Pension calculation formula

On the question of the formula for calculating pension of retired employees of PSUs under EPS-95, the minister said that the “monthly pension of members covered under the Employees’ Pension Scheme (EPS) 1995 is calculated as per the provision provided in paragraphs 12 (2) to 12 (7) and 12 (7A) of the Scheme.”

According to sub-para (2) of paragraph 12 of the EPS, 1995, the amount of monthly pension is computed as:

Monthly pension = Pensionable salary x pensionable service / 70

“The terms ‘Pensionable salary’ and ‘Pensionable service’ have been defined under paragraph 11 and paragraph 10 respectively of the EPS 1995,” the minister said.

In response to another query in the Lok Sabha on the initiatives taken by EPFO to bring companies not yet listed under EPF scheme, the minister said, “Various initiatives are undertaken by the Employees’ Provident Fund Organisation (EPFO) from time to time to increase ease of compliance for the employers so that more and more establishments (including companies) can easily take coverage under EPFO and comply under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and the Schemes framed thereunder, to provide efficient and prompt delivery of services to the members and beneficiaries of EPFO.”