Employees’ Pension Scheme (EPS) and its Benefits

EPS 95 Scheme (EPS 95 Pension Scheme):- Today let’s talk about this EPS scheme. Which is an account linked with your PF account. A part of the salary of every employed person is deposited in the account of Employees Provident Fund Organization. That is, you have become an EPFO account holder. Along with this, if you are an EPFO account holder, then you become a part of the Employees Provident Fund Organization’s EPS 95 Pension Scheme.

EPS 95 Scheme (EPS 95 Pension Scheme): This scheme was implemented in the year 1995 and all those companies which come under the Employees Provident Fund Organization come under this scheme. In this scheme, private sector employees also get the facility of pension every month. Under the EPS Scheme of EPFO, since September 1, 2014, a pension of at least Rs 1,000 has also been arranged by the government through EPFO to all pensioners. This pension starts getting after the age of 58 i.e. retirement.

A part of the salary of EPFO account holders (EPFO) is deposited in the EPFO account every month. The most important thing is that to take advantage of the EPS Scheme, an employee has to work for at least 10 years. After the age of 58, the amount of pension is given by the department.

One advantage of the EPS 95 Scheme is that if a pension holder dies, then in such a situation his family gets the benefit of family pension. If an employee dies while on the job, his family also gets an additional benefit of Rs 6 lakh. On the other hand, under the EPS ’95 scheme, if the pension holder does not have a family, then under the EPS scheme, the nominee gets the benefit of pension for life. On the other hand, if you have not completed 10 years of service, then after 58 years you can withdraw the entire money from the PF account, but you will not get the benefit of pension every month.

Recently, the government has changed the rules of the Employees’ Provident Fund Organization. Now the account holders can withdraw the entire amount deposited in Employees Provident Fund Organization even 6 months before retirement.

Eligibility criteria for EPS

To avail the benefits of pension under the Employees’ Pension Scheme, your employees should meet the following eligibility conditions. The individual should:

  • Be an EPFO member
  • Complete 10 years of active service along with equal years of active contribution towards the EPF pension Scheme
  • Be 58 years or above
  • Have attained at least 50 years of age to withdraw from the EPS pension  at a lower rate
  • Delay withdrawing the pension for by 2 years, i.e., till he or she is 60 years, to become eligible to get EPS pension at a rate of 4% annually

EPS Pension forms details

An EPFO member of the survivor has to fill various EPS forms depending on their eligibility criteria to avail the benefits of the Employees’ Pension Scheme.

Form 10C

The Employees’ Provident Fund (EPF) is a retirement benefit as per the EPFO Act 1995, wherein, the member invests part of his salary every month and the employer makes an equal pension contribution in PF towards his/her EPS pension account. When a member switches jobs, he/she can transfer the EPF amount to a new account or withdraw the amount by submitting an EPS scheme certificate and filling the necessary EPS form. EPS Form 10C, however, can be used to withdraw the accumulated pension amount after a continuous service of 180 days and before the completion of 10 years of active service.

Form 10D

Form 10D is the general form that a member needs to fill to withdraw monthly pension after the age of 50 years. This EPS form can also be filled to withdraw monthly child pension and widow pension too.

Life certificate

Life certificate has to be submitted in November every year by the member or the beneficiary of the pension to certify that he or she is still alive. This form should be submitted in person by the beneficiary to the branch manager of the bank with the active pension account details.

Non-remarriage certificate

This form is a declaration that the widow/widower of the pensioner has not remarried. This declaration has to be submitted every year in November by the widowed individual. The widow will have to furnish this certificate once at the time of the commencement of the pension.

Pension benefits under EPS

Eligible EPS pension members can avail the benefits of the pension according to the age from which they start the withdrawals. For different cases, the value of the pension is also different.

Employee Pension Scheme Work?

Employees’ Pension Scheme (EPS), often called EPF Pension, is a social security scheme administered by the Employees’ Provident Fund Organisation (EPFO). The system provides for a pension after retiring at age 58 for employees who work in the organized sector. Nevertheless, the scheme’s perks are only available if the worker has worked for the company for at least 10 years (the service doesn’t have to be continuous).

EPS was introduced in 1995, and it enabled both new and existing EPF members to participate. Both of the contracting parties contribute 12% of the employee’s wage to the EPF. Every month, the employee’s complete part is given to the EPF, 8.33% of the employer’s portion is donated to the Employees’ Pension Scheme (EPS), and 3.67% is contributed to the EPF.

Check EPS balance

1. On the member passbook portal click on the “Login” button after entering your UAN, password, and solving captcha.

2. “Select Member Id” from the dropdown and click on the “View Passbook” button on the right to display all the pension contributions by the employer till date and the total EPS balance.

Calculation of EPS

The monthly EPS or pension amount an employee receives after retirement is based on the pensionable service and pensionable salary. It is calculated as per the following formula:

Member’ Monthly Salary = (Pensionable Salary*Pensionable Service)/70

Pensionable Salary: The average monthly salary received by an individual in the last 60 months, before he/she decides to exit the Employees’ Pension Scheme.

Pensionable Service: It is the service period — or the duration of employment — of an individual. It is calculated as the total of service periods under different employers. In the event of a job switch, the individual must obtain an EPS Scheme certificate and hand it over to the new employer.

As mentioned earlier, this pension fund can be withdrawn prematurely, but only after the employee has served a term of ten non-continuous years of service. This fund is taxable, and various tax benefits can be availed on the consolidated amount.

Employee Pension Scheme (EPS): FAQs

1) What is the maximum EPS contribution?

EPS is calculated as 8.33% of basic. There is an INR 15,000 the basic salary so the maximum EPS contribution by the employer will not exceed INR 1,249.5.

2) For a case where both parents have passed away is the dependent child entitled to the pension?

Pension is paid to the dependent child as an orphan pension which is 75% of the pension that would’ve been paid to parents.

3) How is EPS transferred online?

With the help of the Composite Claim Form. An individual must apply for EPF transfer during a job change via the EPFO portal.

4) Is the employee holding the EPS account the only beneficiary?

No. In the absence of the employee, the amount can be claimed by dependants.

5) Who falls under the the ‘dependants’ category for pension benefits?

In the absence of the individual holding the EPS account, the spouse or children can claim the amount. For a case with no spouse/children, the amount can be claimed by the nominee declared by the individual. For no nominee, pension amount will go to the individual’s parents.

6) Is it mandatory to transfer PF amount under different PF accounts to the current (active) PF account to get pension?

Yes. In order to avail pension benefits, the subscriber must apply for an online transfer of the funds from previous employers’ PF accounts to the current employer’s PF account.

7) What are the various benefits a spouse is entitled to receive in the event of the subscriber’s (PF account holder) demise?

If the subscriber passed away during service, the nominee will get the settlement of PF dues with interest, EDLI benefits, and widow pension. To avail the said benefit, the spouse (nominee) needs to contact the establishment where their spouse worked.

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