EPS scheme amended, now members with less than 6-month service eligible for withdrawal benefits. Details here

The Employees’ Pension Scheme (EPS), 1995 has been amended by the central government to make EPS members with less than 6 months of contributory service eligible for withdrawal benefits, an official release said on Friday, June 28.

This amendment will benefit more than 7 lakh EPS members every year who leave the scheme with less than 6 months of contributory service, the Ministry of Labour & Employment said.

What exactly has changed?

Under the EPS, the contributory service period for pension is 10 years. Those members who leave before completing the requisite period are eligible to withdraw their benefits as per the time period for which they were enrolled under the scheme.

However, those with less than six months of contributory service were ineligible to claim withdrawal benefits, as per the rules prior to the latest amendment.

"Till now, the withdrawal benefit was being calculated on the basis of the period of contributory service in completed years and the wages on which EPS contribution has been paid. Therefore, only after completing six months and above of contributory service, the members were entitled for such withdrawal benefit," the labour ministry explained.

Consequently, the members leaving scheme, before contributing for 6 months or more, used to get no withdrawal benefit. This was a cause of many claim rejections and grievances, it added.

"During the financial year 2023-24, approximately 7 lakh claims for withdrawal benefits were rejected due to contributory service being less than 6 months. Henceforth, all such EPS members who have not attained the age of 58 years as on 14.06.2024 will become entitled for withdrawal benefit," it further noted.

Table D modified

Another key change approved by the government is that the Table D, a metric used for calculation of EPS benefits, has been modified.

Till now, it considered only the number of years to determine the proportion of wages at exit. For 1 year of service, the proportion of wages at exit stood at 1.02, and the same rose 9.33 on the completion of 9 years of service.

However, with the latest amendment, every completed month of service rendered is taken into account to give proportionate withdrawal benefit to the members.

The amount of withdrawal benefit will henceforth depend upon the number of completed months of service rendered by the member and the wages on which EPS contribution was received.

"It is estimated that every year more than 23 lakh members will benefit from this modification of the Table D," the official release noted.

The government also pointed out that, earlier, the calculation under erstwhile Table D ignored the fractional period of service rendered for less than 6 months after each completed year. This resulted in lesser amount of withdrawal benefit in many cases.

With the modification of Table D, the contributory service for calculating the withdrawal benefit will be now considered in completed months.

This will ensure "fair payment of withdrawal benefit", the the labour ministry said. For example, a member taking withdrawal benefit after 2 years and 5 months of contributory service and wages of ₹15,000 per month was earlier entitled to withdrawal benefit of ₹29,850. Now, that member will receive withdrawal benefit of ₹36,000, it explained.