Employees Pension Scheme (EPS) 1995, Eligibility, Calculation & ITS BENEFITS

The Central Government had launched Employees’ Pension Scheme, 1995 in exercise of the powers conferred by Section 6A of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952). The EPS’95 scheme applies to all the employees of factories and other establishments to which the Employees Provident Funds and Miscellaneous Provisions Act, 1952 applies. Employee Pension Scheme (EPS) came into force on 16th November 1995.

The government has, for the first time, started providing a minimum pension of Rs 1,000 per month to the pensioners under EPS, 1995 from September 1, 2014 by providing additional budgetary support keeping the widespread demands although there is no provision in the Scheme for budgetary support

• Eligibility Criteria:

1. He should be a member of EPFO.
2. For availing the pension benefits under the EPS 95 Pension scheme the employee must serve a minimum of 10 years in service.
3. The age of retirement is 58 years.
4. Member can also withdraw his/her EPS at a reduced rate from the age of 50 years 
5. If an employee has completed less than 10 years of service. but more than 6 months’ service, then he/she can withdraw the EPS amount on being unemployed for more than two months
6. A member’s family also becomes eligible for Pension benefits in case of death of the member while in service.

• Benefits:

1.EPFO has certain benefits, which are payable to orphans as per the EPS 95 scheme as mentioned below in brief.

• Pension amount is 75 per cent of monthly widow pension, with minimum of Rs 750 per month, each for two orphans at a time
• The pension will be paid till 25 years of age
• The pension will be paid lifelong if the person is suffering from any disability

2. Benefit provided in case of death of an employee, who was a member of the scheme at the time of death – Benefit amount 20 times of the wages. Maximum benefit of 6 lakh.

3. Pension to nominee for entire life paid on death of member, in case there is no family, as defined under EPS’ 95.

4. In case a member is not able to remain in service for 10 years before attaining the age of 58 years, he can withdraw the complete sum at the age of 58 years. It is worth mentioning here that he will not get the monthly pension benefits after retirement.

5. Lifelong pension equal to monthly widow pension paid to dependent father or motheron death of member, provided there is no family or nominee of member.

Note: In case of any details and query, the EPFO members can login to the official website of EPFO at www.epfindia.gov.in

Latest News: The RSS-affiliate trade union BhartiyaMazdoorSangh has urged the government to increase the minimum pension under the Employees Pension Scheme, 1995 to Rs 5,000 a month and link the Ayushman Bharat medical schemes to all EPS-95 pensioners while exempting senior citizens from income tax. The current minimum monthly pension under the EPS 95 is Rs 1,000.

“Ayushman Bharat medical scheme should be extended all EPS 95 pensioners and any hike in minimum pension in EPS 95 should be universal hike to all 65 lakh pensioners,” it said.

How to Check Your EPS Amount

A member can check the amount accumulated in his Employees’ Pension Scheme (EPS) account in his EPF Passbook. The last column in the passbook shows the EPS contribution deposited by the employer every month in the account of the member. The passbook can be downloaded from the EPF Passbook portal after logging into the account using UAN and password.

How is EPS 95 Pension Calculated?

The monthly pension amount an employee receives depends on the pensionable service of the employee and pensionable salary. 

Here is the formula for calculating any member employee’s monthly pension income:

Member’s Monthly Pension = (Pensionable salary x Pensionable Service)/70

• Pensionable Salary

It is the average monthly salary that an employee receives in the last 60 months before they decide to exit the Employees’ Pension Scheme. This is as per the judgement of the Supreme Court on November 4^th 2022. Earlier, it was the average monthly salary of the last 12 months of the employee’s participation in the scheme.

• Pensionable Service

This refers to the total number of years for which contributions were made to the EPS account. According to the law, pensionable service must be rounded off to the nearest year. This means that in case you serve for 6 months or more, then it will be treated as a year. If it is less than 6 months, the year will not be counted. If you superannuate at the age of 58 years and have served for more than 20 years, then your service tenure will be increased by 2 years. 

Benefits of EPS 95 Pension

Employees who are eligible for EPS pension can avail a number of benefits. Let us take a look at them:

• Pension From the Age of 58

An EPS member becomes eligible for a pension from the age of 58 as soon as they retire. However, to become eligible for getting a pension, they need to compulsorily contribute for 10 years before turning 58. After retirement, they will receive an EPS pension scheme certificate. This certificate is a must for filling up form 10D to withdraw monthly pension.

• Pension in Case of Disability

In case a member of EPS becomes disabled completely as well as permanently, then they will receive a monthly pension. This is irrespective of whether they have served for the pensionable period or not. This member will receive a pension starting from the date of permanent disability and for their entire life. 

The employer must deposit funds in this person’s EPS account for at least a month to become eligible for a pension. However, the employee will have to undergo a medical test to prove the fact that they are unfit for the job that they did before becoming disabled.

• Pension in Case of Employee’s Death

An EPS member’s family will receive family pension benefits in case of death of the employee under 3 circumstances:

1. If a member completes 10 years of service and dies before the age of 58 years.
2. In case a member dies after they start receiving a monthly pension.
3. If a member dies while still serving and the employer has at least once deposited funds into their EPS account.

• Withdrawal Facility Before Becoming Eligible for Monthly Pension

In case a member of EPS is unable to remain in service for 10 years due to some reason and reaches the age of 58, they can withdraw the entire some they have invested by filling up form 10C. However, in this case, they will not receive any monthly pension.

Disclaimer:Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information.