EPS - Employee Pension Scheme

Eligibility to Avail of EPS Benefits

The eligibility conditions under the Employee Pension Scheme are as follows:

●    Muse be a member of EPFO
●    Must be 50 years for early pension
●    Must be 58 years for a regular pension
●    Must have completed 10 years of service
When someone defers the pension for 2 years (till the age of 60), they will get the pension at an annual increased interest rate of 4%.
 

Features of EPS

The primary features of the Employee Pension Scheme are as follows:

●    The returns from the scheme are fixed due to government backing. Therefore, it is a risk-free investment.
●    Employees with a basic salary along with a DA come to Rs 15,000 or less can enrol under the scheme. 
●    Employee Pension Scheme withdrawals are possible when you attain the age of 50 years but at a lower rate of interest.
●    When a widow or widower remarries, the children are seen as orphans, and they become eligible for the additional pension amount. 
●    Employees enrolling under the EPF scheme will be eligible for enrolling in the EPS scheme. 
●    The minimum monthly pension limit that an employee can receive is Rs 1000.
●    A widow or widower will keep receiving the pension till their death. After their demise, their children will receive the amount.
●    A physically challenged child gets the pension amount till attaining the age of 25 years. 
 

EPS Eligible Service Calculation

When an employee has worked for six months or more, their tenure is considered as one year. The working length isn't considered when the service period is shorter than 6 months. Suppose an employee has worked for 10 years and 8 months. In that case, their tenure is calculated as 11 years. Suppose another employee has worked for ten years and four months. In that case, the tenure of the employee will be calculated as 10 years. 

Contribution Towards EPS

The employer needs to contribute 12% of the employer's basic salary along with DA towards the Employee Pension Scheme. The 12% contribution is divided as follows:

●    EPS contribution: 8.33%
●    EPF contribution: 3.67%

The Government of India also contributes 1.16% toward the Employee Pension Scheme. 
 

Process to Check EPS Balance

You will need your UAN to check your EPS balance. You should complete the UAN activation process before checking your EPS balance. The steps to check your EPS 95 balance are as follows:

●    Open the EPFO portal.
●    Look for the "For Employees" section in the "Our Services" menu.
●    Pick the "Member Passbook" option on the next page. 
●    You will have to enter your UAN, password, and a captcha to log in.
●    Click on the relevant Member ID from the different IDs displayed on the next page. 
●    You will find the total pension amount that has been contributed under the "Pension Contribution" column.
●    You will be able to download the statement showing your Employee Pension Scheme status and take a printout.  
 

Process to Calculate Monthly Pension

The pension amount received as PF depends on the pensionable salary and pensionable service of the employee. Pensionable salary refers to the average salary of an employee per month in the last 60 months before quitting the Employee Pension Scheme. In the case of non-contributory periods during that time, the non-contributory days are not calculated, and the employee receives the benefits of those days.

The maximum monthly pensionable salary is Rs 15,000. Pensionable service refers to an employee's actual period of service. Employees under EPS 95 get a bonus of 2 years after providing 20 years of service. 

The Employee Pension Scheme calculation formula is as follows:

Monthly Pension = Pensionable Salary X Pensionable Service / 70
 

The Process for the Calculation of EPS for the 2 Categories Are Mentioned Below

Calculating the Pension When the Employee Joined Before 16 November 1995:

The EPS 95 pension amount is determined on the basis of their salary, and the amount remains fixed. The breakup of the mention given out in this scenario is as follows:

Calculating the Pension For Employees Who Have Joined After 16 November 1995:

The formula for PF pension calculation in this case is:

EPS = (Service Period x Pensionable Salary) / 70

The pensionable salary is calculated according to the average income of the employee over the last 5 years. 
 

EPS Withdrawal

When the Employee Has Worked for Less Than 10 Years

An employee is unable to withdraw the EPS pension before completing 10 years of service. But if the employee is leaving the company, they can claim the funds. They must submit Form 10C on the EPFO portal to withdraw the amount. 

The employee must have an active UAN card with all KYC details linked to it. The employee will be able to withdraw only a part of the EPN amount depending on the number of years they have worked for. Anyone who has worked for less than six months can apply for a scheme certificate, but they won't be able to withdraw the entire EPS 95 pension.  

When the Employee Has Worked for More Than 10 Years

Employee Pension Scheme withdrawal benefits are stopped when an employee has offered more than 10 years of service. But the employee can submit Form 10C to apply for a scheme certificate. 
 

EPS Forms

The forms available to claim the amount available under the EPS pension are as follows:    

What Happens to the EPS Amount in Case of a Change in Jobs?

When an individual switches jobs, the Employee Pension Scheme amount is shifted to the new member ID. But the pension amount cannot be shifted and needs to stay under the old member ID. The details of the transfer of services help trace the number of years an employee has worked. 

When a person is engaged in their third job, the EPF account gets aggregated into one account. However, the EPS 95 amount is represented in different passbooks. After completing 10 years of service, employees can receive a pension.    

But an employee needs to be 50 years or 58 years to withdraw the pension amount. Employees receive a lower amount when they withdraw their pension at 50. Any employee who has been unemployed for two months can withdraw the Employee Pension Scheme amount even without completing 10 years of service. 

An employee must get a Scheme Certificate from the EPFO when they are switching from an EPFO-covered firm to a non-EPFO-covered one. If they join an EPFO-covered company in future, they will be able to present the certificate. 

The certificate must be provided to the EPF field office when someone doesn't join a company for 50 or 58 years. Individuals who have completed less than 10 years of service but worked with multiple employers can also collect the Scheme Certificate. But an individual switching from one EPF-covered company to another won't need it.