There is a scheme for the employees of the organised sector (enterprises, schools, hospitals that are registered under government) called Employee Pension Scheme to provide social security to the employees. It came into force on 16th November 1995.
The pension amount depends on the average monthly salary of a member in the last 12 months before exiting the EPS and the actual service period of an employee of an organised sector.
For example – If the salary of the person is ₹ 15,000 then the amount which has to be deposited under EPS account needs to be 8.33% of ₹15,000 i.e. ₹1,250. Employees have to pay the amount for their actual salary and not the salary they received in any month which can be lesser than the actual salary due to any reasons. If the employee joined late in a month or take extra leaves which reduces the salary of that month then the employee has to pay the whole amount of the pension which is calculated on the actual salary of ₹15,000.
The maximum pensionable salary has been increased from ₹6500 to ₹15000 a month.
The pensionable service period (total service period of a member given to all the employers combined over all the years) is calculated by adding all the service given by employee to all different employers. An employee should keep in mind to submit EPS scheme certificate to new employer every time after switching jobs.
Calculating service period
The service period is calculated by rounding off the months. If an employee has worked for 6 months or more, the service period will be considered as 1 year. If the service period is less than 6 months, the service period will be considered as 0 and the working duration will not be taken into account. For example, if an employee has worked for 15 years and 6/more months, the number of years of service will be taken as 16. However, if the employee has worked for 15 years and 5/less months, the number of years of service will be considered as 15.
Features of Employee Pension Scheme
- EPS is a government scheme, hence the returns are guaranteed and there is no risk involved. The amount will be returned and no changes will be made after the enrolment of the scheme.
- Only those employees who earn a basic salary of Rs15000 or less including dearness allowance can enroll for this scheme
- Members can avail the benefit of EPS after they turn 50 years of age, however in those circumstances the benefit can be availed at reduced rate of interest.
- The minimum pension amount that can be received is Rs1000.
- Employees who are a part of EPF scheme will automatically get avail for EPS scheme without further need of documentation.
Points to remember
- The employee must serve at least 10 years of service under EPS 95 Pension scheme.
- The age of retirement should be 58 years.
- Members can also withdraw their EPS from 50 years of age at reduced rate.
- If the duration of service is less than 10 years but more than 6 months then the member can withdraw the EPS amount on being unemployed for more than 2 months.
- If a member withdraws the EPS corpus and joins another company before completing the service period of 10 years, he/she will have to start afresh contribution to the basic EPS accountas the service period will also be set as zero.
- If in any circumstances the member became disabled fully and permanently then the member is entitled to a monthly pension even if he/she hasn’t completed their pensionable period. The pension will be payable for lifetime. Member can avail the benefit after undergoing a medical examination to check whether he is unfit for the job he was doing before getting disabled.
- Family of the member can avail the benefit of pension after the death of the member while in service.
- In case the partner of the member is receiving the benefit after his/her death, the widow/widower shall continue to receive the benefit till death. After that their children will receive the pension amount until they become 25 years old.
- If in between the widow/widower gets remarried, the children will receive the pension amount and will be considered as orphans.
Contribution towards EPS
The employer and employee contribute 12% of the employee’s basic salary and DA towards the EPF scheme. The total contribution of 12% is split as 3.67% and 8.33% towards EPF and EPS respectively. Government of India also contributes 1.16% as well which gets added with the total contribution.
How to claim benefits
To claim benefits under the EPS, you will have to fill in and submit Form 10C. This can be done online as well.
Follow the Steps given below to fill Form 10C Online:
- Visit www.epfindia.gov.in.
- Sign into the UAN member portal using your Universal Account Number (UAN) and password.
- In the top menu bar, click on the tab ‘Online Services’.
- From the dropdown menu, select Claim Form 10C, 19, and 31.
- You will be directed to the next page. Here you will see your member details, service details, and KYC details.
- Click on the ‘proceed online claim’ button.
- You will be redirected to the Claims section.
- Choose your claim type – either ‘withdraw PF only’ or ‘withdraw pension only’.
- Carefully fill in the claim form.
- On completion of filling the form, an OTP is sent to your registered mobile number. Enter this into your form. The withdrawal gets initiated.
- On successful submission of the claim form, an SMS notification is sent to your registered mobile number.
- The amount requested will be transferred to your bank account once the claim is successfully processed
Process to check EPS balance
After completing the UAN activation process, the EPS balance can be checked on the EPFO portal with the help of the UAN.
- Visit the official website of EPFO (https://www.epfindia.gov.in/site_en/index.php).
- Click on ‘For Employees’ under the ‘Our Services’ menu.
- Click on ‘Member Passbook’ on the next page.
- Enter the User Name (UAN), password, and captcha details. Click on ‘Login’.
- On the next page. Click on the respective Member ID.
- The total pension amount that has been contributed will be displayed under ‘Pension Contribution’ column.