Description

Employees’ Pension Scheme (EPS) is operated by the Employees’ Provident Fund Organization (EPFO). The EPF Pension Scheme aims to supply pensions to the Employees of the organized category. Employees having constant contributory membership of EPF for 10 years become the beneficiaries under this scheme. The scheme starts generating the monthly pensions once the beneficiary reaches the retirement age of 58 years. 

Features of Employees’ Pension Scheme (EPS)

The core features of the Employees’ Pension Scheme (EPS) are stated below: 

  • As EPS is sponsored by the Indian Government, the returns are guaranteed and there are no risks within the scheme. The amount which will get returned will be fixed and no changes will be made. 
  • It is compulsory for employees to earn a basic salary and additionally a dearness allowance of Rs. 15,000 or less to apply for EPS scheme. 
  • You can withdraw the EPS funds once you obtain the age of 50 years. Nevertheless, the quantity that you get will be at a reduced rate of interest. 
  • In case the widower/widow remarries, the youngsters will get the improved pension amount and they will be classified as orphans. 
  • Employees applied for the EPF scheme will automatically get enrolled within the EPS scheme. 
  • The minimum monthly pension amount that the individual can receive is Rs.1,000. 
  • In case the widow/widower is obtaining the funds under EPS, they're will still receive the quantity until his/her death. Then, the youngsters will get the pension amount until they reach the age of 25 years. 
  • In case the kid is handicapped, they can receive the pension amount until his/her death. 

Benefits of Employees’ Pension Scheme (EPS)

Below are the advantages of the Employees’ Pension Scheme. Take a look at them: 

  • Financial support post retirement 

The monthly pension generated under the EPS Pension Scheme acts as a source of usual income post retirement. Therefore, it extends assistance to the retired individuals, provided the minimum pensionable service time period has been served. 

  • Pre-mature withdrawal 

The eligible age for obtaining the benefits of EPF pension scheme is 58 years. Nonetheless, there is some concession on the regulation for pre-mature withdrawal. Employees can opt for the pre-mature EPS withdrawal at the age of 50. Even though, at a lower rate and there'll be no pension advantages post retirement. 

  • Pension for disable 

Pension is produced regardless of the end of the pensionable service time period, just in case of partial or full disablement. The pension starts producing from the day of disablement and remain constant for a lifetime. A medical check-up could be organized prior to the generation of the pension. 

  • Transferable 

In case the employee dies, his/her pension benefits will be transferred to a loved one. 

Types of Pensions Under Employees’ Pension Scheme (EPS)

There are varying types of pensions under the EPS Pension Scheme such as pensions for children, orphans, and widows, which facilitates the associations of the pension. 

  1. Widow Pension 

Widow pension is also known as the Vridha pension. Under this, the widow of the member gets eligible for the pension. The pension amount will be payable until the death of the widow or her rewedding. If there are more than one widow, the pension will be payable to the eldest widow. 

  1. Child Pension 

The surviving children of the family is eligible for child pension if all the member have passed away including the pension member. The monthly pension will be paid until the kid attains the age of 25. The payable amount is 25% of the widow pension and can be paid to a maximum of two children. 

  1. Orphan Pension 

Children of the member have the entitlement to get the monthly orphan pension of 75% of the worth of monthly widow pension just in case the member dies and has no surviving widow. From oldest to youngest 2 surviving children will get the benefits under the orphan pension of EPS. 

  1. Reduced Pension 

A member of the EPFO can take out an early pension if s/he has served 10 years of service and has attained the age of 50 years but is below 58 years. In such a case, at a rate of 4% for each year the pension amount gets slashed. 

In case the member decides to take out the monthly reduced pension at the age of 54 years, s/he’ll attain the pension at a rate of 84% (100% – 4x4) of the first pension amount. 

Eligibility Criteria of Employees’ Pension Scheme (EPS)

The eligibility criteria to avail of the Employees’ Pension Scheme (EPS) benefits are mentioned below: 

  • You must be a member of the Employees’ Provident Fund Organization (EPFO). 
  • You must be 58 years old. 
  • In case you defer the pension for 2 years (until you reach the age of 60), you'll be eligible to attain the pension at a higher rate of 4% p.a. 
  • You must have served at least 10 years in your service. 

Calculation of Pension Under Employees’ Pension Scheme (EPS)

The pension amount under EPS counts on the pensionable salary of the member and the pensionable service. The monthly pension amount of the member is computed in accordance the below-stated formula: 

Subscriber's Monthly Salary = Pensionable Salary * Pensionable Service / 70 

But now, you would be wondering what’s pensionable salary and pensionable service, so don’t worry. Have a look at them below to understand the formula and calculate your pension accordingly under the EPS scheme: 

  • Pensionable Salary 

The average monthly salary taken out by the member within the past 12 months prior to exiting the Employees’ Pension Scheme in India is the pensionable salary. 

If there are non-contributory time frames within the past 12 months of the utilization, the non-contributory days within the month will not be taken into consideration and the benefit of those days would tend to the worker. 

Example-1: 

If Vikas’ salary is Rs. 15,000, and he joins the company on 3rd of the month, then his salary for that month would be Rs. 14,000 for 28 days (Rs. 500/day*30 – salary of 2 days). Although, the consideration for monthly EPS salary would be for 30 days, i.e., Rs. 15,000. So, the quantity which has got to be deposited into the EPS account of Vikas would be 8.33% of Rs. 15,000 = Rs. 1,250. Hence, the maximum pensionable salary of Vikas has been increased from Rs. 6,500 to Rs. 15,000 per month

  • Pensionable Service 

Pensionable Service implies the actual service period of an employee or member. The Pensionable Service Period is computed simply by adding all the service extended by the member to multiple employers too. Every time an employee switches jobs must submit EPS scheme certificate issued to him/her to new employer. 

The employee has got to get the EPS scheme Certificate issued and submit it to the new employer whenever s/he switches job. It is imperative to note that the employee gets a bonus of 2 years post the competition of 20 years of service. 

Prior to completing the service term for 10 years, if the member takes out the EPS funds and joins another organization, s/he will have to commence afresh for contributing towards the EPS account. 

Pensionable service period is considered on 6 months’ basis. Thus, the minimum pensionable service period is 6 months. The pensionable service span considered is 8 years, if the service span is 8 years 2 months. Although, the pensionable service period is taken as 9 years, if the service term is 8 years and 10 months. 

Check Employees’ Pension Scheme (EPS) Balance

You can check your EPS balance on the EPFO portal using the Universal Account Number (UAN). Here are the steps: 

  • Visit the official EPFO portal. 
  • Click on ‘For Employees’ under the ‘Our Services’ option. 
  • Then, click on ‘Member Passbook’
  • Afterwards, enter your UAN, password, and captcha details. 
  • Click on ‘Login’
  • Furthermore, various Member IDs will appear on screen, click on the respective Member ID. 
  • The entire pension amount will appear under the 'Pension Contribution’ column. 

 

Types of Pensions Forms under Employees’ Pension Scheme (EPS)

In order to avail of the advantages of an employee pension scheme, the subsequent form must be filled by the member. Or the survivors of EPFO Member. 

Types of Pensions Forms Under EPS - 2021 

EPS Form 

Applicant 

Purpose of the Pension Form 

Form 10C 

Member 

  • Withdrawal before 10 years of service 

  • EPS scheme Certificate 

Form 10D 

Member 

  • Monthly pension withdrawal after the age of 50 years. 

  • Monthly widow pension, child pension, etc. 

Life Certificate Pensioner/Guardian 

Pensioner/Guardian 

  • The pensioner signs a form certifying that he/she is alive. 

  • Every year in November where the pension plan is active the form must be submitted to the director. 

Non-Remarriage Certificate 

Widow/Widower 

  • To declare that the widow/widower has not remarried. 

  • The form has to be submitted every year in November. 

Important Points to Remember about Employees’ Pension Scheme (EPS)

Below are the significant things that you must be aware of about the Employees’ Pension Scheme (EPS): 

  • All contributions made within the Employees’ Pension Scheme (EPS) account will be carried out by the employer. 
  • The employer makes a contribution of 8.33% of the employee’s EPS. 
  • The employee’s pay comprises basic wages alongside retaining allowance, dearness allowance, and admissible cash value of food concessions. 
  • The employer will need to make the contribution within 15 days of every month. 
  • All applicable contribution costs will be borne by the employer. 
  • The principal employer will need to make contributions for all the employees working for him/her directly or through a contractor. 
  • The minimum service period must be 10 years so as to be eligible for availing the benefits of EPS pension. 
  • In accordance with the EPS Pension Scheme, the retirement age of the person is fixed at 58 years. 
  • An employee is entitled to be a member of the Pension Fund post attaining the age of 58 years or from the time he begins availing of the reduced pension at the age 50 years. 

FAQs

Q1How much pension can I get from EPF after my retirement?
The pension amount that you can avail of from the EPF post your retirement counts on your pensionable salary and pensionable service. To calculate your pension under the scheme on your own, you can multiply your annual pensionable salary by the no. of years of your pensionable service and then divide the sum by 70, and you'll be able to figure out your EPF pension.
Q2Who are eligible for pension under the EPF Act?
Under the EPF act, the following are the eligible for the pension: 1. Employees’ Provident Fund Organization (EPFO) Member. 2. An employee who has served a minimum of 10 years in his/her service. 3. An employee who has reached the age of 58 years.
Q3Which stands out to be the best - NPS or EPS?
NPS and EPS are similar in nature. Yet, in terms of investment, NPS stands out to be more flexible than EPS. The rate of interest rendered under NPS is somewhat above EPS. Although, both extend tax benefits. You can opt for any of them that supported your preference.
Q4How to do EPS transfer online?
In order to transfer EPS online, log in to your account via the EPF member portal. Once logged in, request the transfer on the work change by means of the composite form. The account will automatically get transferred into your new bank account.
Q5What is pension contribution in EPF passbook?
The pension contribution implies the share provided by the employer in the EPS. Typically, the employer contribution made by the employer is 8.33% of the standard salary of the employee.
Q6Where can I find my EPS account number?
The Member ID of the EPF account acts as the EPS account number. Thus, your EPS account number is your EPF Member ID.
Q7Both my parents have passed away. Am I entitled to a receive monthly pension from their EPS funds?
You can be eligible for the orphan pension at 75% of their total pension corpus.
Q8What will happen to the EPS amount if I change my job?
If you change your job, you will need to transfer your EPF amount to the new Member ID, but the pension amount cannot be transferred and will remain in the old Member ID only. The no. of years you worked will be tracked using the transfer of your service details. Thus, if you switch to your 3rd job, your EPF account will be consolidated in one account, whereas your EPS amount will reflect in your respective passbooks.
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13 Jul 2021
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13 Jul 2021
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13 Jul 2021
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