Employee Pension Scheme, better known as EPS was launched in 1995 by the Employees Provident Fund Organisation ( EPFO ). It is a scheme for salaried employees to make them self reliant at the time of retirement by providing a regular source of income. The benefit of this scheme can be availed only after completing 10 years of service and after the age of 58. As a part of your EPF account, the employer is supposed to contribute 12% of your salary. This 12% is further divided into 8.33% for EPS and 3.67% for EPF. This article will take you through all the important aspects associated with EPS 95.
It is important to note that as of September 1, 2014, monthly EPS is calculated on the employee’s actual salary if less than INR 15,000 and on INR 15,000 if salary exceeds this limit. Therefore, the maximum EPS contribution can be INR 1,250 per month.
What is the Eligibility Criteria to Avail EPS Benefits?
One must fall under the following criteria to be eligible to avail the benefits of their Employee Pension Scheme:
- A minimum of 10 years in service
- Must be a member of EPFO
- Age of retirement is 58. Although, one can also withdraw their EPS balance at the age of 50 years
Availing pension can also be extended for 2 years i.e. till the age of 60. If this extension is done then the pension is available at an additional 4% every year. Moreover, if you have worked for less than 10 years but are unemployed for more than two months then you can withdraw from your Employee Pension Scheme.
How is the Pension under the Employee Pension Scheme Calculated?
The pension amount is calculated on the basis of the pensionable salary and pensionable service.
Monthly Salary = Pensionable Salary X Pensionable Service/70
Pensionable salary is the average monthly salary of the employee in the last 12 months of service.
Let us assume that Purva’s monthly salary is INR 15,000 and the EPS contribution is 8.33%. Therefore, in this case, the pensionable salary will be INR 1249.5 ~ to INR 1250 [(15,000*8.33)/100 = 1249.5] and her annual pensionable salary will be INR 15,000 (1250*12)
Pensionable Service is the actual service period that the employee has served. It is important to note that if an employee withdraws the EPS before completing the minimum service period, i.e., 10 years and switches to a new company, the contribution for the EPS scheme will have to be reset. The employee also needs to get the EPS Scheme Certificate every time he switches a job. It is important to keep in mind:
- The pensionable service period is calculated on a 6 months basis
- The minimum pensionable service period is 6 months
- Employees are also rewarded an additional 2 years of pensionable service for completing 20 years in service.
If the service period is 9 years and 4 months, then the pensionable service period considered is 9 years. However, if the service period is 9 years and 7 months, the pensionable service period is taken as 10 years.
Now, in the case of Purva let us assume her service period is 9 years and 7 months so, her monthly pension will be:
INR 15,000 (annual pensionable salary as calculated in the Pensionable Salary section) * 10 (years of Pensionable Service)/70= INR 2,142.85
What are the Types of Pensions Available under the Employee Pension Scheme?
There are mainly four different types of pensions available under the Employee Pension Scheme:
- Widow Pension: Under this, the pension will be available to the spouse after the demise of the employee. The spouse (widow) will receive the pension amount until death or remarriage. The minimum amount available under this pension is INR 1000.
- Child Pension: Child pension as the name suggests is given to the dependent child of the deceased employee. This pension is 25% of the widow pension and the child can receive it till he/she turns 25. The child pension is generated along with the widow pension.
- Orphan Pension: If the deceased employee does not have a surviving spouse, then the pension amount is received by the children. The orphan pension is not more than 75% of the widow pension. The benefit is available to two surviving children from oldest to youngest.
- Reduced Pension: If an employee after turning 50 decides to withdraw the pension, then they will receive the pension amount at a slashed rate of 4% for every year that is less than 58 years. This is known as a reduced pension. For example, if one withdraws their EPS amount at the age of 55 then he will get the pension at a rate of 88% (100% – 3*4) of the original pension amount.
How can I check my Employee Pension Scheme amount?
Follow the below-mentioned steps to check your EPS amount at any given point:
- Visit Employees Provident Fund Organisation Portal
Go to Employees Provident Fund Organisation Portal
- Click on ‘Services’
Now click on ‘Services’
- Select ‘For Employees’
Click on ‘For Employees’
- Go to Member Passbook
Under ‘Services’ click on Member Passbook
- Add your UAN and Passoword
Enter your UAN and Password
- Select ‘Member ID’ and see you EPS Amount
Click on the concerned Member ID and you can now see your EPS amount in your Pension Contribution column
You can also check your EPS amount in your EPS account passbook as well. You can download the passbook from the EPF pensioners portal.
Yes, you are eligible for claiming orphan pension at 75% of the pension that would have been paid to your parent/parents.
Your Member ID of the EPF account is the same for EPS account. Your EPF, as well as, EPS contributions are deposited under the same Member ID.
In order to transfer EPS online, you have to log in to the EPF employee portal. Once logged in, you can request the transfer on the job change via the composite claim form. The amount will automatically be transferred to your new account.