EPS (EMPLOYEE PENSION SCHEME)
the EPS was introduced in the year 1995. It is a scheme by the Employee’s Provident Fund Organization (EPFO), with the main aim of helping employees in the organized sector. This scheme ensures that employees receive a pension once they attain the age of 58 years old.
The employee and employer each contribute 12% of the employee’s basic salary and Dearness Allowance (DA) towards EPF. While the entire share of the employee is contributed towards EPF, 8.33% of the employer’s share goes towards EPS. The scheme acts as a regular source of income after the employee retires.
Eligibility criteria for EPS
The eligibility criteria to avail the EPS benefits are mentioned below:
- Must be an EPFO member.
- Profile Photo must be uploaded in member profile.
- Must have completed at least 10 years of service (Either in one oganisation or different organisations).
- Attained 58 years or above for regular pension (50 years for early pension at a lower rate).
- In case you defer the pension for 2 years (i.e. until you reach the age of 60 years), you will be eligible to receive the pension at an additional interest-rate of 4% per year.
Types of Pensions under Employees’ Pension Scheme
Widow Pension or Vridha : A widow of the deceased EPFO member is eligible for this pension. The pension is paid to the widow until her death or remarriage. In case of more than one widow, the pension value is paid to the oldest widow.
The amount for a monthly payment of the widow pension is calculated according to Table C of the Employees Pension Scheme 1995. As on date, the minimum pension amount has been increased to INR 1,000 per month.
In case of death of the member, monthly children pension is applicable for the surviving children in the family in addition to the monthly widow pension. The monthly pension will be paid till the child attains the age of 25 years. The amount payable is 25% of the widow pension and can be paid to a maximum of two children.
If the EPFO member dies and does not have any surviving widow, then his children are entitled to receive a pension under the orphan EPF pension scheme. Under this, the orphan or orphans receive 75% of the widow pension monthly. he benefit will be applicable for two surviving children from oldest to youngest.
An EPS member can withdraw early pension if he or she has attained the age of 50 but is less than 58 years old, and, if they have made an active pension contribution in EPF for 10 years or more. In such cases, the pension value is reduced to a rate of 4% per year until the employee reaches the age of 58 years.
For example: if an EPS member, who is 55 years of age, wishes to withdraw reduced pension monthly, then he or she will get the payment at the rate of 88% of the original pension amount. It is calculated as 100% – (3*4) = 88%.
EPF Pension forms
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.
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 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 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.
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.
Pension at 58 years
The member is eligible for the benefits of pension after his/her retirement, that is, after 58 years of age. However, for this, they should have compulsorily made an active pension contribution in EPF for 10 years, at least, before their retirement to avail the pension benefits. Post-retirement, the EPS pension scheme certificate gets generated. This certificate is required to fill up form 10D to withdraw the pension monthly.
Pension on discontinuing service without fulfilling the criteria
If the member discontinues service or is unable to stay in duty for 10 years prior to 58 years of age, he/she could withdraw the entire amount once they attain 58 years of age by furnishing form 10C.
Pension on absolute disablement
If the EPFO member becomes completely and permanently disabled, then he/she is qualified to receive monthly pensions, irrespective of them not having served the minimum service period required to get monthly pensions. Their employer must deposit EPF minimum pension funds into their EPF account for a minimum of 1 month for them to become eligible for this pension.
A member can avail the pension benefits monthly from the very date of disablement and get paid for his/her lifetime. But, the member has to take a medical test to ascertain that he/she is not fit for the work that they were doing before getting disabled.
Pension if the member is deceased
The family of the EPFO member becomes eligible to receive the EPS pension (or, EPF pension) in the below-mentioned cases:
- If the EPFO member dies after the commencement of monthly pension
- If the EPFO member dies before the age of 58 but has completed the 10 minimum years of active service contribution
- If the member dies in the service duration and the company or employer has deposited pension funds in the members EPF account for a minimum of 1 month