People often do not understand the difference between Employee provident fund and Employee pension scheme and mistakenly understand both as one. In this article, we will tell you what EPS is?, how many types of pension schemes there are in EPS, how much of your salary goes to EPS account, how much pension you will get from EPS and how you will Withdraw the money from Employee pension scheme account.
What is Employee Pension Scheme?
The Employees Pension Scheme (EPS) is a retirement plan administered by the EPFO. This scheme is for retired employees working in the organized field, who have retired at the age of 58 years. However, the benefits of this scheme can be availed only if the employee has been working for at least 10 years (of course not on his own continuous basis). EPS was launched in 1995 and current and new EPF members can join the scheme.
The employer / company and the employee contribute equally 12% of the employee’s salary to the EPF fund. However, the entire portion of the employee’s contribution goes to the EPF and 8.33 per cent of the employer / company’s share go to the employee’s pension scheme (EPS) and 3.67 per cent to the EPF per month.
Eligibility Criteria for Employee Pension Scheme
To receive benefits under the Employees Pension Scheme (EPS), one must meet the following conditions.
- You must be a member of EPFO
- You have worked for at least 10 years
- You are 58 years old
- You can start withdrawing money from EPS at the age of 50, but it will be less.
- You can defer your pension for two years (up to the age of 60), then you will receive a pension at an additional rate of 4% per year.
How to calculate your pension under EPS
The amount of pension in PF depends on the pensionable salary and pensionable services of the member i.e. how many years of service have been done. The amount of monthly pension of the member is calculated according to the following formula.
Monthly Salary of Employee = Pensionable Salary X Pensionable Service / 70
Pensionable Salary: –
The average monthly salary of an employee for the last 60 months before leaving, EPS is his average monthly salary.
If you do not contribute to the EPS account for a few days within the last 60 months of employment, the benefits of those days will still be paid to the employee. Suppose a person starts working from the 3rd of the month then he will get 28 days salary at the end of the month but his contribution to EPS will be 30 days.
If the monthly salary of a person is Rs. 15,000, then 28 days salary of that person will be Rs. 14,000 (less than Rs. 15000) However, the monthly salary considered for EPS is Rs. 15,000 for 30 days.
The maximum pensionable salary is limited to Rs. 15,000 per month.
Since the employer / company contributes 8.33% of the salary to the employee’s EPS account per month, the amount deposited in the employee’s EPS account per month is = ₹ 15000 X 8.33 / 100 = ₹ 1250
Pensionable Services: –
The amount of time you have served is considered your pensionable service. When calculating the duration of your pensionable service, the amount of time you have worked in different companies / institutions is added. The employee has to get the certificate of EPS scheme and submit this certificate to the new company / company every time he changes his job.
Remember that employees receive a 2 year bonus after completing 20 years of service.
If the member withdraws his EPS funds before the expiry of 10 years of service or before joining any other company, he will have to start anew to contribute to the EPS account and the service time will also start from zero.
The duration of pensionable service is calculated on the basis of 6 months. Minimum pensionable service period is 6 months. If the term of service is 8 years 2 months, the pensionable service period will be treated as 8 years. However, if the tenure of service is 8 years and 10 months, the period of pensionable service will be treated as 9 years.
Pension benefits under the Employees Pension Scheme (EPS)
All eligible members of EPFO can avail pension according to their age from the time they start collecting pension. The amount of pension varies from case to case.
Retirement pension at the age of 58 years
A member can start receiving pension benefits at the age of 58 after retirement. However, the member has to serve for 10 years till the age of 58 years. An EPS Scheme Certificate is issued which can be used to fill up Form 10D for submission for monthly pension drawing.
Pension at the time of leaving the job before being eligible to receive monthly pension
If a member cannot work for 10 years before reaching the age of 58, he can withdraw the full amount by filling up Form 10C at the age of 58. Remember here that they will not get the benefit of monthly pension after retirement.
Pension for being completely disabled while on the job
If an EPFO member is completely disabled and has not completed the period of pensionable service, he is still entitled to a monthly pension. To be eligible for pension, his employer / company has to deposit money in his EPS account for at least one month.
The employee becomes eligible for a monthly pension from the date of disability and receives a lifetime pension. However, a medical examination of the employee may be performed to check if the member is unable to perform the task he or she was performing before becoming disabled.
Pension for family in case of death of employee
The employee’s family may receive pension benefits in the following cases.
- If an employee dies while on the job and the employer / company deposits money in that employee’s EPS account for at least one month
- If the employee has worked for 10 years but dies before reaching 58 years of age
- In case of death of the employee after commencement of monthly pension.
Types of Pension Plans under Employee Pension Scheme.
There are various types of pension schemes under EPS such as pensions for widows, children and orphans. This pension provides income to the family members of the EPF customer.
Widow’s pension
Widow Pension or Old Age Pension (EPS Widow Pension) is paid to the widow of the eligible member. The amount of this pension will be paid to the widow till her death or remarriage. In case of multiple widows, the widow who is older will get the amount of pension.
The amount of monthly old age pension depends on Table-C of EPS, 1995. At present the minimum pension has been increased to Rs.1000. The amount of widow’s pension is calculated according to the table given below, according to the pensionable salary; explain that the monthly pensionable salary will be 15,000 rupees. And so more pensions can be found.
| For Widow Monthly Pensionable Salary in Rs. | Monthly pension in Rs. |
| 6200 | 2021 |
| 6250 | 2026 |
| 6300 | 2031 |
| 6350 | 2036 |
| 6400 | 2041 |
| 6450 | 2046 |
| 6500 | 2051 |
Child pension
In case of death of a member, monthly child pension (EPS) is paid to the surviving children in the family in addition to monthly widow pension. This pension will be given till the child reaches the age of 25 years. The amount paid can be paid up to 25% of the widow’s pension and up to two children.
Orphan pension
If the member dies and there is no surviving widow, her children will be entitled to 75% of the value of the monthly widow’s pension as a monthly orphan pension (EPS Orphan Pension). This benefit will apply to the two surviving children, from maximum to minimum.
Decreased pension
If an EPFO member has completed 10 years of service and is 50 years of age but under 58 years of age, he or she will be able to withdraw the pension amount quickly. In this case, the pension amount is reduced at the rate of 4% per annum for the remaining 58 years of age.
If the member decides to withdraw the reduced monthly pension at the age of 56, he will receive 92% (100% – 2 × 4) of the basic pension amount.
EPS Pension Form
EPFO members or their dependents must fill out the following forms to receive the Employee Pension Scheme (EPS) benefits-
- Form 10C member – Withdraw money before working for 10 years, secondly Certificate of EPS Scheme
- Form 10D member- For withdrawal of monthly pension after the age of 50 years and for monthly widow pension, child pension etc.
- Life Certificate Pensioner / Guardian – The pensioner signs a form stating that he is alive. You have to submit it to the manager of the bank where you have the pension account in November of each year.
- Non-remarriage certificate widow- Which proves that the widow / widow did not remarry, It has to be submitted in November every year
How to check EPS account balance?
Members can check the amount deposited in their employees’ pension scheme (EPS) account through EPF pass-book. The last column in the passbook shows the EPS contribution submitted by the employer / company each month. But the passbook can be downloaded after logging in to the account using UAN and password.
Important issues related to EPS pension
- All contributions to the Employees’ Pension Scheme (EPS) account must be made by the employer / company
- The company contributes 8.33 percent of employees’ salaries to EPS
- The employee’s salary includes the basic salary along with expensive allowance, retaining allowance and cash discount of food discount.
- The employer / company has to make his contribution within the last 15 days of each month
- The cost of all applicable contributions should be borne by the company / employer.
- The principal employer / company must contribute directly or through a contractor to all employees working for it.
- The minimum service period eligible for pension benefits is 10 years
- If you have been working for less than 10 years and more than 6 months, if you have been unemployed for more than two months, you can withdraw your EPS amount.
- According to the scheme, the retirement age of the employee has been fixed at 58 years.
- The employee ceases to be a member of the pension fund at the age of 58 or after receiving a reduced pension (at the age of 50).
Frequently Asked Questions about EPS:
Answer – You will get 75% of the amount of pension that was given to your parents as orphan pension.
Answer – Online transfer of EPS can be done through composite claim form. Members need to login to the EPF Member Portal and apply for EPF Transfer at the time of job change. EPF and EPS accounts will be transferred to the new account.
Answer – EPF account member ID works as ID of EPS account. Your EPF and EPS contributions are credited under the same member ID.
Answer – In case of death of the employee, his widow will get EPS widow pension, in the same way the surviving children of the employee will also get the benefit of child pension every month. Up to a maximum of two children up to the age of 24 years, 25% of the widow’s pension can be received every month as child pension.
Answer – Pension contribution in EPF passbook is the amount deposited by the company / employer in the employee’s EPS account every month. It is about 1250 rupees per month.
Answer – When applying for a transfer, the amount of pension is transferred to a new account with EPF funds. The amount is seen as zero in the passbook, but the same amount is found in the database of the regional EPF office.
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