The Employee’s Pension Scheme (EPS) was introduced in the year 1995 with the main aim of helping employees in the organised sector. All employees who are eligible for the Employees Provident Fund (EPF) scheme will also be eligible for EPS.
The scheme is provided by the Employees’ Provident Fund Organisation (EPFO) and ensures that employees receive a pension once they attain the age of 58 years old. Existing, as well as new EPF members, can avail the benefits of the scheme. 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 to avail EPS benefits
The eligibility criteria to avail the EPS benefits are mentioned below:
- You must be a member of the EPFO.
- You must have attained the age of 50 years for early pension and 58 years for regular pension.
- In case you defer the pension for 2 years (until you reach the age of 60 years), you will be eligible to receive the pension at an additional rate of 4% per year.
- You must have completed at least 10 years of service.
Features of EPS
The main features of the EPS scheme are mentioned below:
- Since EPS is sponsored by the Indian Government, the returns are guaranteed and there are no risks to invest in the scheme. The amount that will be returned will be fixed and no changes will be made.
- It is mandatory for employees who earn a basic salary plus DA of Rs.15,000 or less to enrol in the scheme.
- You will be able to withdraw the EPS once you attain the age of 50 years. However, the amount that you receive will be at a reduced rate of interest.
- In case the widower/widow gets remarried, the children will receive the enhanced pension amount and they will be categorised as orphans.
- Employees who are enrolled in the EPF scheme will automatically be enrolled in the EPS scheme.
- The minimum monthly pension amount that the individual will receive is Rs.1,000.
- In case the widow/widower is receiving the EPS amount, they will continue to receive the amount until his/her death. After that, the children will receive the pension amount until they attain the age of 25 years.
- In case the child is physically challenged, they will receive the pension amount until his/her death.
EPS Eligible service calculation
In case an employee has worked for 6 months or more, the service period will be considered as 1 year. However, if the service period is less than 6 months, the working duration will not be taken into account. Therefore, if an employee has worked for 10 years and 7 months, the number of years of service will be taken as 11. However, if the employee has worked for 10 years and 5 months, the number of years of service will be considered as 10.
Contribution towards EPS
The employer and employee contribute 12% of the employee’s basic salary and DA towards the EPF scheme. The 12% contribution made by the employer is split in the below-mentioned ways:
- EPF Contribution: 3.67%
- EPS Contribution: 8.33%
Apart from the above-mentioned contributions, the Government of India contributes 1.16% as well. Employees are not eligible to contribute to the scheme.
Process to check EPS balance
The EPS balance can be checked on the EPFO portal with the help of the Universal Account Number (UAN). However, individuals must complete the UAN activation process first. The step-by-step procedure to check the EPF balance after the activation of UAN is complete is mentioned below:
- You must visit the official website of EPFO (https://www.epfindia.gov.in/site_en/index.php).
- Click on ‘For Employees’ under the ‘Our Services’ menu.
- Click on ‘Member Passbook’ on the next page.
- Next, enter the User Name (UAN), password, and captcha details. Click on ‘Login’.
- On the next page, various Member IDs will be displayed. Click on the respective Member ID.
- The total pension amount that has been contributed will be displayed under ‘Pension Contribution’ column.
- You will be able to download and take a print out of the statement as well.
Process to calculate monthly Pension
Calculation of monthly pension falls into the 2 categories that are mentioned below:
- Pension calculation for individuals who have joined before 16 November 1995.
- Pension calculation for individuals who have joined after 16 November 1995.
The process for the calculation of EPS for the 2 categories are mentioned below:
Calculation of pension if the individual has joined before 16 November 1995
In case individuals have joined the organisation before 16 November 1995, the amount of pension they receive is fixed and it is based on their salary. Given in the table below is the break-up of the pension amount that an individual will receive:
|Number of years of service (years)||Pension Amount (In case the salary is Rs.2,500 or less)||Pension Amount (In case the salary is more than Rs.2,500)|
|More than 20||Rs.150||Rs.170|
Calculation of Pension in case the individual has joined after 16 November 1995
The below-mentioned formula must be used for the calculation of pension in case the individual has joined after 16 November 1995:
EPS = (Service Period x Pensionable Salary)/70
Calculation of Pensionable Salary is based on the average income an individual has made over the last 5 years.
- If an individual has worked for less than 10 years
An individual will be able to withdraw the EPS amount if he/she hasn’t completed 10 years of service. However, if the employee is currently working and has not finished 10 years of service, he/she will not be able to withdraw EPS amount. Only once the individual quits the company and before joining a new company can the EPS amount be withdrawn.
He/she can withdraw the EPS amount on the EPFO portal by claiming Form 10C. The employee will need to have an active UAN and the KYC details must be linked to the UAN in order to withdraw the EPS amount online.
An individual who has worked for less than 6 months can apply for a scheme certificate but will not be able to withdraw EPS as per the EPFO rules. Depending upon the number of years an individual has worked, only a percentage of the EPS amount can be withdrawn.
- If an individual has worked for more than 10 years
EPS withdrawal benefits will be stopped if the employee has completed more than 10 years of service. However, by filling Form 10C, the employee will be able to apply for a scheme certificate.
There are different EPS forms that are available
|Form||Who can use it?||Purpose|
|New Form 11||Member||Must be used by the member to furnish bank and Aadhaar details. Once the UAN has been activated, a cheque must be provided with the name, IFSC code, and account number mentioned on it.|
What happens to the EPS amount in case of a change in jobs?
In case an individual changes jobs, he/she will be able to transfer the EPF amount to the new Member ID, but the pension amount will not be transferred and will remain in the old Member ID. The number of years an individual has worked can be tracked with the help of the transfer of service details. Therefore, in case an individual is in his/her third job, the EPF account can be consolidated in one account, whereas the EPS amount is reflected in their respective passbooks.
Individuals are eligible to receive pension once they have completed 10 years of service. However, individuals must attain the age of 50 years or 58 years to withdraw the pension amount. In case individuals withdraw the pension amount when they attain the age of 50 years, they will receive a lesser EPS amount. Individuals who have not completed 10 years of service but are unemployed for 2 months or more will be allowed to withdraw the EPS amount.
In case an individual is leaving a company that comes under the EPFO to join a company that doesn’t, it is vital that they take the Scheme Certificate from the EPFO. This certificate can be submitted in case you join a company that comes under EPFO in the future. In case the individual does not join a company until he/she attains the age of 50 years or 58 years, the certificate can be submitted at the respective EPF field office. The certificates can also be accumulated in case individuals have worked for different employers and have completed less than 10 years of service. However, in case individuals join another company that comes under EPFO, the certificate will not be needed.
FAQ’s On EPS
I am 54 years old and a member of the Family Pension Scheme. I have left my job on 13-12-93. I have already taken the withdrawal benefit. Am I eligible to join the new scheme now?
Yes, you can join the new scheme, provided you refund the withdrawal benefit along with the interest. Thereafter, you will be entitled to receive pension after you turn 58 years old, if you complete a minimum of 10 years of contributory service by then.
Can a 58 year old Family Pension Scheme Member who has retired on 15-01-94, avail pension under the new scheme?
Yes, if he or she has retired after reaching the age of 58 years, and between 01-04-93 and 15-11-95, the employee may join the new scheme after returning the withdrawal benefit plus interest. The member is then entitled to pension immediately, starting from the date of exit provided he has completed 10 years of eligible service.
Can a member of the Employees’ Pension Scheme change his or her nomination?
Yes, a member of the EPS can change his or her nomination with the rules for such nomination. It simply means that the nominee should be a family member of the employee. Only if the employee has no family, then he or she can nominate anyone else according to their wish.
Under the EPS, is employee the only beneficiary of the fund?
Benefit of the EPS is paid to the employee and in his or her absence, to the family of the employee.
Is it possible to receive pension earlier than the age of maturity of the EPS?
Yes, you may receive pension on turning 50, however pension payable from that age will be reduced by 3% for every year falling short of 58.
How many years of service should a member of EPS complete in service in order to be eligible for receiving pension?
An employee is entitled to receive pension only after completion of minimum 10 years of eligible service.