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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.
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.
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
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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.
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