EPS - Employee Pension Scheme
Eps- All You Need to Know
Founded in 1995, the Employees' Pension Scheme (EPS) was created primarily to support employees in the industry. All employees are eligible for EPS if they meet the Employees Provident Fund (EPF) program requirements.
EPS- A Brief
As for EPS, it is run by the Employees' Provident Fund Organisation (EPFO), which ensures that workers receive a pension once they reach the age of fifty-eight. Both current and new EPF members may benefit from the program. 12% of the employee's basic pay and Dearness Allowance (DA) is contributed to the EPF by both the employee and the employer.
The employer's contribution goes to EPS at a rate of 8.33%, while the employee's entire portion goes to the EPF. The plan offers a consistent income stream following the employee's retirement.
Requirements for EPS
The following list includes the requirements to be eligible for EPS benefits:
- You have to be an EPFO member.
- For an early pension, you must be 50 years old, and for a regular pension, you must be 58 years old.
- You will be eligible to receive the pension at an increased rate of 4% per year if you delay receiving it for two years (until you turn 60).
- You must have served for at least ten years.
An individual must meet the following requirements in order to be eligible to receive benefits under the Employees' Pension Scheme (EPS):
- They must be an EPFO member.
- They must have served his 10-year term by now.
- They are presently 58 years old.
- Additionally, they can take a reduced rate of EPS (employee pension scheme) withdrawals beginning at age 50.
- The pension can also be delayed for two years (up to the age of 60), after which, it will be paid at an additional rate of 4% every year.
Employee Pension Scheme (EPS) Features
Below are some of the key components of the EPS scheme:
- Because EPSis backed by the Indian government, the returns are guaranteed, and there is no risk involved in investing in the program. Nothing will change regarding the fixed amount that will be reimbursed.
- If an employee's base salary and deferred allowances are INR 15,000 or less, they must enrol in the program.
- You will be able to cancel your Employee Pension Scheme once you turn 50. The amount of money you receive will have a low-interest rate, though.
- If the widower or widow marries again, the kids will be considered orphans and get extra pension money.
- Employees who have already signed up for the EPF plan will automatically be added to the EPS plan.
- The person will receive a minimum of Rs. 1,000 per month in a pension.
- Until the deceased person's passing, the widow or widower receiving the EPS amount will keep doing so. Until they turn 25, the children will continue to receive a pension.
- If the child has a physical disability, they'll keep getting the pension money until they pass away.
Important Information Regarding EPF Pension
- Employees' Pension Scheme (EPS) accounts must have all employer-made contributions.
- For EPS, the employer contributes 8.33% of the employee's salary.
- The employee is paid a base salary, a dearness allowance, a retaining bonus, and the permissible cash value of food concessions.
- Within 15 days of each month's end, the employer must contribute.
- The employer shall pay all applicable contribution costs.
- The principal employer's contributions must cover all employees working under him directly or as contractors.
- To be eligible for pension benefits, 10 years of service are required as a minimum.
- if your service has been less than ten years. if you have less than six months of service but more than that, you may withdraw your EPS if you go more than two months without a job.
- According to the plan, a person must be 58 years old before retiring.
- After turning 58 or when he begins receiving a reduced pension, an employee no longer qualifies as a pension fund member (at the age of 50).
Calculating eligible service for EPS
A worker's service tenure is counted as one year if they have been employed for at least six months. The working duration will only be considered if the service period is at least six months. The number of years of service will therefore be determined as eleven if an employee has worked for ten years and seven months. However, ten years of service are counted if someone has worked for ten years and five months.
Making a contribution to EPS
Together, the employer and employee put 12% of the employee's basic pay and DA into the EPF program. Following are the breakdowns of the employer's 12% contribution:
- EPF Contribution: 3.67%
- Contributing 8.33% to EPS
- Along with the contributions already mentioned, the Government of India also provides 1.16%. The scheme does not allow contributions from employees.
Checking the EPS balance
Using the Universal Account Number, the EPS balance can be viewed on the EPFO portal (UAN). The UAN activation process must be finished first.
Following the successful completion of UAN activation, the detailed procedure for employee pension scheme login to check the EPF balance is described below:
Step 1: Check out the EPFO website at https://www.epfindia.gov.in/site en/index.php.
Step 2: On the "Our Services" menu, select "For Employees."
Step 3: On the following page, click "Member Passbook."
Step 4: Enter the User Name (UAN), password, and captcha information in the following step. Click "Login."
Step 5: Various Member IDs will be shown on the following page. Click to select the appropriate Member ID.
Step 6: The total amount of pension contributions will be displayed in the "Pension Contribution" section.
Step 7: The statement will also be available for download and printing.
Pensions under the Employees' Pension Scheme
Pensions for orphans, children, and widows are among the various types of pensions available under the EPS 95 pension scheme.
1. Widow's Pension
The member's widow is qualified for a pension under the Vridha Pension or Widow Pension. The pension payment will be made up until the widow's passing or her subsequent marriage. The oldest widow will receive the pension payment if there is more than one.
2. Pension for Child
The family's surviving children are also qualified for a monthly child pension in the incident of a member's passing. Until they turn 25, the monthly pension will be continued for the child. The payable amount, which is 25% of the widow’s pension, is limited to two children.
3. Pension for Orphan
If the member dies without a surviving widow, his children will receive a monthly orphan pension equal to 75% of the widow's monthly pension. The orphan pension will be paid to two living children, beginning with the oldest.
4. A Lower Pension
If an EPFO member has served for ten years and is 50 or older but not yet 58, he may withdraw his pension early. Age in this instance is below 58 years. The amount of the pension is reduced by 4% annually.
Forms For Pension
In order to receive benefits under the Employees' Pension Scheme (EPS), a member of the survivors of an EPFO member must complete the following forms:
|EPS Form||Applicant||The Form's Purpose|
|Form - 10C||Member||
|Form - 10D||Member||
|Certificate of Life||Pensioner or Guardian||
|Certificate of Non-Remarriage||Widow or widower||
Calculation method for monthly pension
The two categories listed below apply to the monthly employee pension scheme calculation:
- Pension calculation for those who joined prior to November 16, 1995.
- Pension calculation for those who joined after November 16, 1995.
The two categories' EPS calculation procedures are described below:
Pension calculation if someone joined before November 16, 1995:
The amount of the pension received by those who joined the company before November 16, 1995, is set and based on their salary. The pension amount that an individual will receive is broken down as follows in the table below:
|No. of years of service||Amount of Pension (if the salary is Rupees 2500 or less)||Amount of Pension (if the salary is more than Rupees 2,500)|
|10 years||Rupees 80||Rupees 85|
|11 years – 15 years||Rupees 95||Rupees 105|
|15 years – 20 years||Rupees 120||Rupees 135|
|More than 20 years||Rupees 150||Rupees 170|
Pension calculation for those who joined after November 16, 1995:
If the person joined after November 16, 1995, the pension calculation must be done using the following formula:
EPS formula: EPS is calculated as (Service Period x Pensionable Salary)/70.
A person's average income over the previous five years is used to calculate pensionable salary.
Employee Pension Plan Benefits
Depending on their age when they begin taking pension withdrawals, all eligible members of the Employees' Provident Fund Organisation are eligible to receive pension benefits. The pension amount may vary depending on the circumstances.
Pension upon Turning 58 Years Old
Once the EPFO member reaches the age of 58, they are qualified for pension benefits. To be eligible for pension benefits, they must have worked for at least 10 years by the time they are 58 years old. When a member reaches age 58, EPFO will produce an EPS Scheme Certificate, which they can use to complete Form 10D to withdraw their monthly pension.
Taking a Pension before Being Qualified for a Monthly Pension
If an EPFO member is unable to work for 10 years before turning 58 years old, he or she may withdraw the entire amount contributed at that time by completing Form 10C. It should be noted that because they did not meet the fundamental requirement of having 10 years of service, they will not receive any additional money as a monthly pension after retiring.
Pension for Total Disability during Service Due to Accident
Regardless of whether he has completed the required amount of service toward his pension, an EPFO member who suffers a total and permanent disability as a result of an illness or accident is qualified to receive a monthly pension. Their employer must have made a minimum one-month deposit in their EPS account to qualify for pension benefits.
As soon as the member becomes permanently disabled, they become eligible for the monthly pension, which is paid to them for the rest of their lives. The member must, however, undergo a medical examination to determine whether they are disabled and is no longer able to perform the work. This procedure is followed as a precaution to ward off any fraudster ruses.
If an EPFO member dies while serving an active term, their family will receive a pension. The following situations will qualify a member's family or dependents for the pension:
- If an EPFO member has been working when they pass away and their employer has deposited money into their EPS account for at least a month.
- If the EPFO member is still alive after 10 years of service but before turning 58.
- If an EPFO member passes away following the beginning of the monthly pension
Withdrawal of EPS
If Someone Hasn’t Worked for More than Ten Years-
A person will be qualified to withdraw the EPS amount even if they haven't completed their full ten years of service. The employee will only be qualified to receive EPS funds if employed and accrued ten years of service. Only after the employee has left the company and before beginning, a new job may the EPS amount be withdrawn.
To withdraw the EPS amount, they can submit Form 10C on the EPFO portal. The employee's KYC information must be linked to their active UAN in order to withdraw their EPS amount online.
People who have worked for less than six months may apply for a scheme certificate, but EPFO regulations prohibit them from withdrawing EPS. Depending on how many years an individual has worked, only a portion of the EPS amount may be taken.
If a Person Has More than Ten Years of Employment-
If someone completes more than 10 years of service after starting their job, their EPS withdrawal benefits will be terminated. The employee can apply for a scheme certificate by completing Form 10C.
Employers must register every employee and require them to contribute a predetermined amount of their pay. The payments are made on a consistent monthly basis. Both employers and employees make monthly contributions to the EPF.
Additionally, it motivates people to save money that they can use in emergencies. It is one of the safest financial instruments because it promises a return without taking any chances.
Frequently Asked Questions (FAQs)
How to perform an online EPS transfer?
You can transfer EPS online using the Composite Claim Form. To request an EPF transfer when a job changes, the member must sign in to the EPF Member Portal. Automatic transfer of the EPF and EPS accounts to the new account.
Can a nomination for the EPS be modified?
A member of the EPS may modify their nomination in accordance with the applicable rules. It implies that the nominee must be a member of the employee's family. The employee may nominate anyone else they choose if they do not have a family.
How many years of EPS membership must be completed before a member is qualified to receive a pension?
A worker can only receive a pension after finishing at least 10 years of qualifying service.
What is the employee contribution amount under the 1995 Employee Pension Scheme?
Both current and new EPF members were welcome to join the Employees Pension Scheme 1995. Employer contributions totaling 12% of each employee's pay go toward funding the EPF.
Under EPS 1995, what is the maximum pension?
A pension plan for employees was created in 1995 through an amendment, and it called for a deposit of 8.33% of the employers' contribution to the corpus of the provident fund in the pension fund. The maximum monthly pensionable salary at the time was Rs 5,000; later, it was increased to Rs 6,500.
Who qualifies for the EPF 95 pension?
However, the benefits of the EPS can only be obtained if the employee has been in service for at least 10 years. All employees who are eligible for the EPF scheme are also eligible for EPS (this does not have to be continuous service). Both current and new EPF members are eligible to receive benefits from the scheme.
What does employee pension scheme status refer to?
Employee pension scheme status is the status of the Employee's Provident Fund Organization (EPFO) has a social security program called the EPS. After they retire at 58 years old, the employees in the organized sector will receive a pension under this plan.