Employee Pension Scheme

Eligibility Criteria for EPS

• Membership with EPFO through any employer.
• He or she should have accumulated a minimum of 10 years of service, not necessarily in continuous employment.
• Reaching the age of 58 is required to access a regular pension through EPS, and an early pension option is available once they attain the age of 50.
• Employees also have the option to defer their pension for up to two years beyond the standard retirement age, potentially increasing their pension amount by 4% for each deferred year.

What is the Method for Determining Your Pension in the EPS?

The calculation of the pension amount under EPS hinges on the concept of the pensionable salary and the pensionable service period.

The member's monthly pension is determined using the following formula:

• Member's Monthly Pension = Pensionable Salary × Pensionable Service / 70.

Pension Benefits Provided by the Employees' Pension Scheme (EPS)

EPS offers a range of pension benefits to cater to diverse circumstances:

• Pension on Retirement at 58: Upon completing 10 years of service and attaining 58 years of age, an EPS Scheme Certificate is generated, enabling the member to fill Form 10D and commence monthly pension withdrawals.
• Pension upon Leaving Service: If a member leaves service before accumulating 10 years but reaches 58 years of age, they can withdraw the entire sum by submitting Form 10C, although this forfeits the monthly pension benefits.
• Pension on Total Disablement: In cases of total and permanent disability, pension eligibility arises regardless of the pensionable service period, provided the employer contributed for at least a month.
• Pension for the Family: The family of a deceased member becomes eligible for pension benefits under various scenarios, ensuring financial support for survivors.

Varieties of Pension Plans Offered by the Employees' Pension Scheme

• Widow Pension: Available to eligible widows of EPS members, the amount depends on Table-C of the EPS, 1995, and remains payable until death or remarriage.
• Child Pension: Surviving children receive this pension along with the widow pension until the child turns 25, amounting to 25% of the widow pension.
• Orphan Pension: If the member dies without a surviving widow, orphan pension supports eligible children with 75% of the widow pension.
• Reduced Pension: Members who complete 10 years of service but are aged between 50 and 58 can opt for reduced pensions with a decreasing percentage.

EPS Forms

Several forms facilitate the administration of EPS:

• Form 10C: Enables withdrawal before 10 years of service and requests the EPS Scheme Certificate.
• Form 10D: Facilitates monthly pension withdrawal after 50, widow and child pensions, and more.
• Life Certificate: The pensioner's annual self-certification of living status.
• Non-Remarriage Certificate: Ensures widow/widower remarriage is declared annually.

How to Check Your EPS Amount?

To check your EPS balance, follow these simple steps:

This will display all the pension contributions made by your employer to date, along with your total EPS balance. Alternatively, you can download a PDF version of the passbook by clicking on the "Download Passbook" button.

What Happens to the EPS Amount When Changing Jobs?

When an individual changes jobs, there are specific implications for their EPS and Employees' Provident Fund (EPF). Here are a few EPS points applicable when changing jobs:

1. EPF Transfer: The EPF amount can be transferred to the new Member ID when a person changes jobs. This ensures that the accumulated provident fund savings continue to grow in one consolidated account, making it easier to manage.

2. EPS Retention: However, the pension amount (EPS) cannot be transferred and must remain associated with the old Member ID. As a result, if someone switches jobs multiple times, they may have EPS amounts distributed across different passbooks.

3. Service Details: The transfer of service details is essential for tracking the number of years an individual has worked, which is crucial for calculating pension eligibility.

4. Pension Eligibility: To be eligible to receive a pension, individuals must complete a minimum of 10 years of service. The age at which they can withdraw the pension varies, typically starting at 50 years or 58 years. Withdrawal at 50 years results in a reduced EPS amount.

5. Early Withdrawal: In certain cases, individuals who have not completed 10 years of service but are unemployed for two months or more may be allowed to withdraw the EPS amount.

6. EPFO to Non-EPFO Transition: If an employee moves from an EPFO-covered company to a non-EPFO-covered company, they must obtain a Scheme Certificate from the EPFO. This certificate can be presented when joining an EPFO-covered company in the future. Alternatively, if an individual does not join such a company until reaching the age of 50 or 58, the certificate can be submitted to the appropriate EPF field office.

7. Accumulation of Certificates: Individuals who have worked for multiple employers and have completed less than 10 years of service can accumulate multiple certifications. However, if they join another EPFO-covered company, they may not need the certificate.

EPS withdrawals

There are two scenarios under which you can make withdrawals from your Employee Pension Scheme (EPS):

Service Exceeding 10 Years:

Service Not Exceeding 10 Years:

• You can initiate the withdrawal of your pension fund through Form 10C directly on the EPFO portal.
• The percentage of the pension amount you can withdraw is determined by the number of years you've served.
• It is crucial to ensure that your Universal Account Number (UAN) is linked with Know Your Customer (KYC) details on the portal for a smooth withdrawal process.

In situations where your service period does not exceed 10 years, specific conditions apply. If you are still employed and have not yet completed a decade of service, withdrawing the EPS amount is not permitted. The pension amount can only be claimed during the period between leaving one job and commencing another, provided you meet the eligibility criteria.

Important Points to Remember about EPS Pension

Before contributing to your EPS account, it's essential to keep in mind several key points regarding EPS pension:

1. Employer Contributions: The employer is responsible for making all contributions to the Employees' Pension Scheme (EPS) account.

2. Components of Employee's Remuneration: The employee's remuneration includes the basic salary, dearness allowance, retention allowance, and the allowable cash value of food concessions.

3. Employer's Contribution Responsibility: The employer is obliged to cover all applicable contribution costs.

4. Employer's Contribution Percentage: The employer contributes 8.33% of the employee's salary to the EPS.

5. Monthly Contribution Deadline: Employers must make contributions within 15 days of the end of each month.

6. Minimum Service Period: A minimum of 10 years of service is necessary to qualify for pension benefits.

7. Mandatory Contributions: All employees, whether hired directly or through a contractor by the principal employer, are required to make contributions.

8. Retirement Age: The scheme specifies a retirement age of 58 years.

9. Membership After 58 Years: After reaching the age of 58 or when opting to receive a reduced pension at 50 years, an employee is no longer considered a member of the pension fund.

10. Withdrawal Eligibility: If an individual has served for less than ten years but more than six months and has been unemployed for over two months, they can withdraw their EPS amount.

Conclusion

The Employee's Pension Scheme stands tall as a pillar of financial security for India's organized sector employees. With its rigorous eligibility criteria, transparent calculations, and diverse pension options, EPS ensures that retirement isn't a phase of uncertainty, but a time of well-deserved peace and financial stability. Through its well-designed mechanisms, EPS demonstrates a commitment to safeguarding the well-being of workers, underscoring its significance in the realm of social security.

FAQs about Employee Pension Scheme (EPS)