EPS or Employee Pension Scheme – Concept, Eligibility Criteria, Types, Benefits & more

Know everything about Employee Pension Scheme or EPS here. Find details like its concept, eligibility criteria, types, benefits & more.

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About EPS or Employee Pension Scheme

Back on 16^th November 1995, the EPS or Employee Pension Scheme came into effect. The EPFO or employees provident fund organization provides social scheme security.

EPS scheme most likely make provisions for employees based in the organized sector. It gives people a pension while they retire at the age of 58 years.

The employee can avail of the benefits only after serving the company for ten years.

The employees who are eligible for the Employee provident fund are also suitable for the employee pension scheme. Both new and existing members can avail the benefits of the scheme.

The employer and employee need to contribute 12% of the basic salary of the employee and the Dearness allowance.

Undoubtedly, the total contribution is towards the employee provident fund, but 8.33% of the contribution is made towards the employee pension scheme.

The scheme most likely acts as a regular income for individuals post-retirement.

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Eligibility criteria under Employee Pension Scheme

• If an employee wants to avail of the benefits of the employee pension scheme, then he or she must serve the company for ten years.
• The retirement age is 58 years.
• From the age of 50 years, the employee can withdraw his or her EPS at a reduced rate.
• If an employee is unemployed for more than two months, employees can withdraw money. But only under one condition that they have completed service of more than six months but less than one year.
• If any employee becomes disabled, then he or she can withdraw the amount under the scheme irrespective of the employment tenure. Above all, the amount is payable for a lifetime. But before withdrawing the money, the employee must undergo a medical examination to prove his disability.
• In case of the death of the employee, the family members are most likely eligible to avail the benefits of the scheme.

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Different types of Pensions available under the EPS

Widow Pension – The widow pension is typically termed as a Vridha pension. It is mainly applicable to the eligible member.

The pension amount is payable to the member until her death or remarriage. If there is more than one widow, then the amount is owed to the eldest widow.

Ideally, the amount of Vridha pension mainly depends upon the table C of the EPS, 1995. As of now, the minimum pension amount available is Rs.1000.

Child Pension – Monthly children pension is most likely to apply to the surviving children in the family in case of a family member’s death.

The pension is payable until the child turns 25 years old. The amount payable is 25% of the widow pension amount, and a maximum of 2 children can avail of it.

Orphan Pension – This type of pension is payable to an orphan when a member dies and doesn’t have a spouse. Kids are eligible to get the amount.

The amount payable is 75% of the value of the widow pension. The benefit is applicable to two children.

Reduced Pension – If an employee serves a company for ten years and is 50 years old but is less than 58 years, then he can withdraw pension.

You need to know then the pension amount available is only 4% annually as the age is less than 58 years.

Steps to calculate your pension under the Employee Pension Scheme or EPS

Ideally, the pension amount under the PF depends on the member’s pensionable salary and pensionable service.

Pensionable Salary

Ideally, the pensionable salary is the average monthly salary in one year before the employee leaves the scheme.

For example, if there are some non -contributory days, then they are not considered under the scheme.

Pensionable Services

The ideal service period of the member is pensionable service. When it comes to calculating pensionable service periods, employers add service periods.

Every time an employee switches the job, the employee needs to get an EPS scheme certificate. After completing 20 years of service, the employee receives a bonus of 2 years.

The employee needs to start contributing to the EPS account afresh if he withdraws the corpus before completing the ten-year service tenure.

Additionally, the service period will be zero again. The pensionable service period is six months basis.

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Benefits available under Employee Pension Scheme (EPS)

All the members of EPFO are eligible to avail of pension benefits depending on their age when they start withdrawing the pension. The pension amount varies from case to case.

Pension on the retirement at the age of 58 years

Once an employee retires at the age of 58 years, then he is eligible to avail of pension benefits. Thus, it is compulsory for an employee to serve the company for ten years.

Therefore, an employee can withdraw pension under the EPS scheme by filing a 10D form.

Pension on leaving service before becoming eligible for monthly pension

If an employee is not able to serve the company for ten years before turning 58 years, then they can withdraw the money.

After filling the 10C form, the employees can withdraw the money, but they are not eligible for available monthly pension benefits.

Pension on total disablement during service

If you are a member of the EPFO, and you become disabled during service, then you can avail of a monthly pension irrespective of the service period.

The employer needs to deposit funds in the EPS account for one month.

How can you check your EPS account?

An employee can check the amount accumulated in his Employees’ Pension Scheme (EPS) account under EPF Passbook.

You can see the EPS contribution made by the employer every month in the last column of your account.

Additionally, you can download the passbook from the EPF passbook portal. You can log in to the portal by using your UAN account and password.

Form details of the EPS or Employee Pension Scheme

Form 10C – As per the EPFO Act 1995, the employee’s provident fund is ideally an employee’s provident fund.

Under the scheme, the employee invests some part of his salary every month. Besides the employee, the employer also makes an equal contribution in PF towards the EPS account.

An employee needs to fill Form 10C under the EPS scheme if he or she wants to transfer the EPF amount to a new account.

By filling the 10C form, the employees can also withdraw the amount.

Form 10D – This form is ideally a general form that an employee needs to fill if he or she wants to withdraw money at the age of 50 years.

You also need to fill the form to withdraw your child or widow pension.

Life Certificate – Every year in November, members need to submit the life certificate to certify they are alive. You need to submit the form in person to the bank’s branch manager.

Non-Remarriage Certificate – The widower or widow of the pensioner needs to submit this certificate once in November when the pension begins.

Conclusion – Employee Pension Scheme or EPS

Some of the best instruments to deposit and save your money for a better future are the Employees Pension Scheme and Employees Provident Funds.

In the first 15 days of the month, the employer needs to contribute the amount. The employer bears all the cost of the contribution.

The minimum service period under the scheme is ten years. Hence, the scheme is fantastic to lead a comfortable life post-retirement.

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