Higher pension or interest on money kept in PF account? Which will earn more
Higher Pension: Amidst the discussion about EPFO, a lot of confusion has come to the fore regarding whether the employee should opt for a higher pension scheme or earn interest from the money kept in a PF account. Know the answers to these questions before choosing any option.
These days the discussion of the Employees' Provident Fund Organization (EPFO) is becoming very popular among private sector employees as there is time till June 26 to opt for a higher pension under the Employees' Pension Scheme (EPS) run by EPFO.
Although taxpayers have ample time to opt for a higher pension under EPS, they should note that opting for a higher pension option means lower EPF contribution, resulting in a smaller Employees' Provident Fund (EPF) corpus on withdrawal of pension on retirement. It is possible
It is worth noting that if you choose the higher pension scheme, then the amount you pay for it will be deducted from your PF account, on the other hand, now the government has started giving a good interest rate of 8.15 percent on the money deposited in PF. Now there is confusion among the employees about whether to opt for a higher pension scheme or earn interest by keeping PF money in the PF account itself.
The higher pension scheme is eligible only for those who fulfill the criteria of being a member of EPF. If taxpayers are looking for higher monthly pension income after their retirement, then they can choose the Higher Pension Scheme under EPS.
You will also have to pay tax on this pension received every month. Choose this option only if after retirement you need money every month instead of the lump sum. You will get this pension as long as you are alive, after that some part of this pension can also be received by the spouse and children as per eligibility.
On the other hand, choose EPF when you have to use the money lying in your PF account for something big because after retirement you get PF money together. The thing to note here is that you do not have to pay any tax in EPF like in EPS.
Choose this option when you intend to make a big investment in retirement, such as buying a house, starting a business, etc. If you have such thoughts in your mind, then you should earn interest on the money lying in the PF account at the rate of interest given by the government.
