Invest Smart: Higher pension scheme - all you need to know

The deadline to apply for the higher pension scheme has been extended to June 26th 2023. 

The higher pension scheme allows subscribers to opt for a higher pension amount by increasing contribution towards the Employees’ Pension Scheme (EPS). There will be a reallocation of corpus from the EPF to the EPS scheme from the date of joining the scheme. This means a large portion of money would be paid from the EPF to the EPS to avail a higher pension. 

Only those who were members of the EPF as on September 1, 2014, are allowed to opt for a higher pension. 

There are some factors to keep in mind before applying for the higher pension scheme. First, while this means a 
higher pension for the subscriber in retirement, the pension is fully taxable at marginal rate of taxation of the subscriber, says Mrin Agarwal, Founder Director, Finsafe India. 

Another factor that goes against EPS is the fact that on death of the subscriber, the surviving spouse will only receive 50% of the pension that was being received by the subscriber, says Agarwal.