7 min read
Updated on Apr 27, 2023
The Employee Pension Scheme or EPS was introduced to support employees working under various companies within the organized sector with pension schemes. The EPS scheme applies to all the employees who come under the scheme of Employee Provident Fund (EPF). Let us understand the Employee Pension Scheme details better in the post ahead.
The Employee Pension Scheme is a social security scheme administered by the Employees’ Provident Fund Organization (EPFO). This scheme was initiated for the organized sector employees to enroll and avail pension facility after they retire at the age of 60. The benefit of EPS scheme can be availed by both new and the existing members of Employees’ Provident Fund (EPF).
Under EPF, employees contribute 12% of their basic salary combined with their dearness allowances. The equal amount (12% share) is also contributed by employers towards the EPF fund too. In case of employee contribution, the entire 12% goes to their EPF fund. On the other hand, in the case of employers’ contribution 8.33 % of the amount goes to EPS account and the remaining 3.67% goes towards the EPF account. This scheme allows the employee to avail a steady source of income once they retire.
The pension amount that the recipient receives every month under the EPS scheme is INR 1,000, which is the minimum amount. The EPF account is mandatory for every employee with a salary less than INR 15,000.
Read More: Best Retirement Plans 2022-23 for Senior Citizens
The EPS pension scheme has certain eligibility criteria for EPF pension rules that requires to be met to avail the benefits under the scheme as mentioned below:
You may note that an employee cannot contribute under EPS directly. So, the direct contribution towards an EPS account goes from the employers’ only. Out of the 12% contribution that goes from the employer, 8.33% goes towards EPS, while the remaining 3.67% goes towards the EPF account of the employee. In case of the employees’ contribution, the entire 12% goes towards EPF. Hence, overall 15.67% of total contribution including employers’ and employees’ goes to EPF, while 8.33% of the amount goes to EPS.
>>A Beginner’s Guide to Retirement Pension Plans in India
Below are the salient features of the Employee Pension Scheme:
Here are the benefits of EPS account as mentioned below:
The EPS account provides several types of pensions as mentioned below:
To check the EPF status, follow the steps below:
The pension amount in EPF account depends on two things:
The monthly pension amount of the account holder can be calculated using the below formula:
EPF Member’s Monthly Pension is equal to Pensionable salary multiplied by Pensionable service divided by 70
Monthly pension = pensionable salary x Pensionable service/70
Pensionable salary – It is the average monthly salary earned by the EPF member in the last 12 months prior to exiting the EPS scheme.
Pensionable service – Pensionable service is the actual service period of the EPF member under the EPS scheme. This includes the service periods under different employers (added together) at the time of calculating the pensionable service period.
Every time the EPF member switches a job, he has to get the EPS Scheme Certificate issued and submitted to the new employer.
Here are the rules to follow for withdrawal of pension contribution under EPS:
Employees can withdraw their EPS amount if they left employment without completing ten years of service. For employees who are still working and have not completed 10 years of service cannot withdraw EPS amount. Moreover, employees who leave a job can withdraw the EPS amount before he/she joins another organization.
Further, employees can withdraw EPS amount via the EPFO portal with the help of claiming form 10C. For this, the basic requirement is that the employee should have an active UAN, which should be linked to the KYC details. Here, the employee can withdraw a certain percentage of the EPS amount based on the years of service.
Any employee under EPS plan can withdraw the amount from the scheme by filing Form 10C.
|Form||Who needs to Fill||Benefits Received|
|Form 10C||Nominee or plan holder||To receive benefit of scheme certificate withdrawal|
|Form 10D||Plan holder||To receive early pension after 50 and before 58 years
To receive regular pension after 58 years
To receive disability pension
|Form 10D||The beneficiary or widower/widow or children||
To receive family pension
To get beneficiary or dependent pension
To obtain orphan or children pension
|Life Certificate||Pensioner||Needs to be submitted by a nominee or children every November
Needs to be submitted to the bank manager responsible for pension disbursing
The widower needs to submit annually
The widow needs to submit at the time of pension initiation
To be submitted to the pension disbursing bank manager
Browse PayBima Blogs to read interesting posts related to Health Insurance, Car Insurance, Bike Insurance, Term Life Insurance, and Investment section. You can visit PayBima to Buy Insurance Online.
View this post on Instagram
An individual who has completed at least 10 years of service in the organized sector is eligible for EPS.
EPF is a scheme where both an employer and an employee contributes part of the employees' salary. In EPS, only an employer makes the contribution.
If the person is still working, he/she cannot withdraw the full pension amount. An employee can withdraw a full amount only when the person has been unemployed for a minimum of 2 months. In this case, the tenure of employment must be less than 10 years and more than 6 months.
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.
An overview of LIC’s popular comprehensive insurance policy - Jeevan Saral - its benefits to the policyholder, and its special feature - the maturity calculator.
Everything you need to know about the YSR Pension Kanuka scheme, the eligibility requirements to apply, the benefits of the plan, and the different types.
Jeevan Saral Plan comes from the house of LIC, Life Insurance Corporation of India. Also, referred to as Plan 165, Jeevan Saral Policy is one.
LIC is one of the most trusted and reliable public sector insurance companies in India. The company has been serving customers with their varied insurance.
Unless you have planned well for your life after retirement, you may have to face a financial crunch in your old age. Let us take.
If you are willing to invest in market linked plans, there are two ways to do so. One is through single lump sum payment and.
FDs or Fixed Deposits are among the safest kinds of investments that anyone can rely on. FDs for senior citizens is the best option for.
HRA or House Rent Allowance is a part of a salary compensation offered by organizations to their employees above their basic salary. This post will.
India is one of the countries with the biggest number of banks and financial institutions in the world. One such progressive bank, the Karnataka bank,.
Calculators are used to calculate premiums, interest rates and other important aspects related to insurance and investments. Let us take a look at the FD.
Speak to our advisor
Corporate Office : Mahindra Insurance Brokers Ltd ( A Mahindra Group Company ) Sadhana House, Ground Floor, 570 P. B. Marg, Behind Mahindra Towers, Worli, Mumbai 400018.
Licenced by IRDAI License No. 261; License Validity : 17-05-2025; Category : Composite Broker; CIN : U65990MH1987PLCO42609 Member of Insurance Brokers Association of India (IBAI).
Insurance is the subject matter of solicitation.
For a seamless experience, use the latest version of Chrome/Firefox/Internet Explorer.
Copyright © 2023 Mahindra Insurance Brokers. All Right Reserved.