Employee Pension Scheme (EPS)

The Employee Pension Scheme (EPS), also known as the Employee Pension Scheme 1995, is a government-backed retirement benefit plan introduced by the Employees’ Provident Fund Organisation (EPFO). This scheme ensures financial security to employees in the organized sector after retirement or in case of permanent disability. Under this scheme, a portion of the employer's contribution (8.33% of the employee's salary) goes into the EPS pension fund. Eligible employees receive monthly pension benefits after retirement. The scheme also provides benefits to family members in case of the member's death.

Table of Contents:

• ⇾ Eligibility criteria for EPS
• ⇾ Different Types of Pensions under EPS
• ⇾ EPS Calculation
• ⇾ Process to Check EPS Account Balance
• ⇾ EPS Forms
• ⇾ EPS Withdrawal
• ⇾ Steps for EPS Withdrawal
• ⇾ Benefits of Employee Pension Scheme
• ⇾ Guidelines for EPS (Employee Pension Scheme)
• ⇾ Frequently Asked Questions

Eligibility criteria for EPS

To avail the benefits of the Employee Pension Scheme, certain eligibility conditions must be fulfilled.
These include:

• The employee must be a member of the Employees’ Provident Fund (EPF).
• A minimum of 10 years of contributory service is mandatory to qualify for pension benefits.
• The pension becomes payable once the employee attains the age of 58 years.
• Early pension can be claimed from the age of 50, but with a 4% reduction for every year before the age of 58.
• Pension can be deferred until 60, with a 4% increase in the pension amount for each year of delay.

Different Types of Pensions under EPS

The Employee Pension Scheme 1995 offers a range of pension types to support members and their dependents under various life circumstances, ensuring continued financial security throughout retirement and beyond.

1. Member (Self) Pensioners

These are pensions received by the EPS members themselves.

• Superannuation Pension: Granted to employees who retire at the age of 58 with at least 10 years of eligible service. This is the standard form of EPS pension meant for post-retirement income.
• Early Pension: Available to employees who choose to retire between the ages of 50 and 57. However, the pension is reduced by 4% for each year the pension is taken before the age of 58.
• Disablement Pension: Provided to employees who become permanently disabled while still in service, regardless of the number of years served. The pension is payable for life and begins from the date of disability.

2. Spouse Pensioners

When the EPS member passes away, the spouse becomes eligible for a widow/widower pension. The circumstances of death affect the classification:

• Death in Service: If the member dies while actively contributing to EPS, the spouse receives the pension immediately.
• Death Away from Service: If the member had left the job but had eligible service under EPS and dies before starting pension, the spouse is still entitled to the benefits.
• Death as Pensioners: If the member dies while receiving the EPS pension, the spouse continues to receive a widow/widower pension.

3. Children Pensioners

Pension is extended to the children of the deceased member:

• Normal Children: Eligible for a pension up to the age of 25. Two children are entitled at a time, each receiving 25% of the widow/widower's pension.
• Disabled Children: If a child is permanently disabled, they are eligible for lifelong pension, regardless of age. This ensures sustained financial support for dependents with disabilities.

4. Orphan Pension

If the deceased member has no surviving spouse, the children are eligible for an orphan pension. Each child can receive up to 75% of the member's pension. A maximum of two orphans are covered at a time.

5. Nominee Pensioner

In the absence of a spouse, children, or parents, the member can nominate another person to receive pension benefits. This is done via a nomination form and is applicable only in specific cases.

6. Dependent Parents Pensioner

If no spouse or children survive the deceased member, dependent parents become eligible to receive pension benefits. Preference is typically given to the mother first, followed by the father.

EPS Calculation

The pension amount under the Employee Pension Scheme is calculated using the following formula:

Monthly Pension = (Pensionable Salary × Pensionable Service) / 70

Key Terms:

• Pensionable Salary: The average of the last 60 months’ basic salary and dearness allowance.
• Pensionable Service: Total number of years during which the employee contributed to EPS.

Process to Check EPS Account Balance

You can easily check your EPS pension balance online via the EPFO portal. Here’s how:

1. Visit the EPFO Member Portal.
2. Log in using your UAN (Universal Account Number) and password.
3. Click on the 'View' tab and select ‘Member Passbook’.
4. Your EPF and EPS contributions will be displayed in the passbook.

This service allows employees to track their pension contributions and plan for retirement more effectively.

EPS Forms

To avail the benefits of the Employee Pension Scheme (EPS), specific forms must be filled out and submitted by eligible members or their family members. These forms serve different purposes based on the applicant’s circumstances under the Employee Pension Scheme 1995.

These forms are essential for maintaining compliance and ensuring uninterrupted pension payments under the EPS pension system. Members must ensure the timely submission of relevant documents to continue receiving their entitled benefits.

EPS Withdrawal

Withdrawal from the Employee Pension Scheme (EPS) depends on the length of an individual’s service and employment status. The rules vary significantly based on whether the employee has completed 10 years of pensionable service or not.

1. If the Individual Has Worked for Less Than 10 Years:

• Employees who leave their job before completing 10 years of service are eligible to withdraw their EPS pension amount.
• Withdrawal is only allowed after leaving the job and before joining a new employer.
• The withdrawal must be made using Form 10C, which can be submitted online via the EPFO portal.
• To apply online, the individual must have:
• An active UAN (Universal Account Number)
• KYC-compliant account (linked Aadhaar, PAN, and bank details)

Note: Individuals who have worked for less than 6 months are not eligible to withdraw EPS. They may apply for a Scheme Certificate instead. Only a partial amount of EPS is payable, based on completed years of service.

2. If the Individual Has Worked for More Than 10 Years:

• Once an employee completes 10 or more years of eligible service, EPS withdrawal is not permitted.
• Instead of a withdrawal, the employee must apply for a Scheme Certificate using Form 10C.
• This certificate enables the individual to claim pension benefits upon reaching the eligible retirement age (typically 58).

Steps for EPS Withdrawal

If you’re eligible and wish to withdraw your EPS amount, follow these steps:

1. Log in to the EPFO portal.
2. Select ‘Online Services’ and click on ‘Claim (Form-31, 19, 10C & 10D)’.
3. Confirm and verify your KYC details such as PAN, Aadhaar, and bank account.
4. Choose the applicable form – for example, Form 10C if your service is less than 10 years.
5. Submit the claim request online.
6. The EPS amount is credited directly to your registered bank account once approved.

This streamlined digital process makes accessing your EPS pension hassle-free.

Benefits of Employee Pension Scheme

The Employee Pension Scheme (EPS), launched under the Employee Pension Scheme 1995, offers essential financial protection for employees and their families during and after employment.

Key Benefits:

• Monthly Pension After Retirement: Provides a lifelong pension from age 58, with the option for early retirement from age 50 (with reduced benefits).
• Full Withdrawal at 58: If a member leaves service 10 years before turning 58, they can withdraw the full pension amount at age 58.
• Disability Coverage: Members who become permanently disabled are eligible for a monthly pension, even without completing the minimum service period.
• Family & Survivor Pension: In case of the member’s death (during or after service), the pension extends to dependents such as spouse, children, or parents.
• Government-Backed Security: Managed by EPFO, the scheme ensures reliability and consistent payouts.
• Tax Advantages: Contributions qualify for deductions under Section 80C of the Income Tax Act.

Guidelines for EPS (Employee Pension Scheme)

The Employee Pension Scheme (EPS), governed by the Employee Pension Scheme 1995, is designed to provide retirement benefits to employees in the organized sector. Here are some important guidelines and rules to keep in mind:

Key Guidelines:

• Employer-Only Contributions: All contributions to the EPS account are made entirely by the employer. Employees do not contribute directly to EPS.
• Contribution Rate: The employer contributes 8.33% of the employee’s monthly wages (basic salary + dearness allowance + other eligible allowances) towards EPS.
• Payment Timeline: Employers must deposit the contribution within 15 days after the end of each month.
• Responsibility of the Employer: The principal employer is responsible for making EPS contributions for all employees, including those employed through contractors.
• Minimum Service Requirement: A minimum of 10 years of service is required to be eligible for monthly pension benefits under EPS.
• Early Withdrawal Option: Employees who have completed more than 6 months but less than 10 years of service can withdraw EPS after being unemployed for 2 months or more.
• Retirement Age: The official retirement age under EPS is 58 years. Employees can choose to receive a reduced pension from age 50, but they stop being active members of the scheme once they begin receiving the pension.