Employees’ Pension Scheme: Often employees are in a dilemma that when and how they can withdraw their EPS money. EPFO has made some terms and conditions for this.
Employees’ Pension Scheme: Most of the working people have Provident Fund (EPF) account. Along with EPF, employees also have an Employee Pension Scheme-EPS (Employees’ Pension Scheme) account. It is also called pension fund. The pension amount is deposited in the employee’s account every month. This amount is deposited from the employee’s company account. But, often people are confused as to when they can withdraw EPS money. Withdrawals from EPS are allowed subject to certain conditions. Come, know everything related to this…Also Read: EPFO New Rule: PF rules are changing since September, if you miss, the company will not be able to put money in your account
How is the money deposited in the Employees’ Pension Scheme?
According to the existing rules of EPFO, every month the employee contributes 12 percent of his salary (Basic Salary + DA) to the EPF account. At the same time, the employer also puts the same amount in your provident fund account. However, 3.67 percent of the employer’s contribution is deposited in the EPF and 8.33 percent in the Employees’ Pension Scheme. But, it has a cap of Rs 1,250 per month. Actually, 8.33 percent contribution in EPS is calculated at Rs 15000 (Basic + DA). However, the demand to remove this capping (limit) has been going on for a long time and hearing is going on in the Supreme Court.
Who can withdraw money from EPS account?
According to EPFO Retired Enforcement Officer Bhanu Pratap Sharma, lump sum money can be withdrawn from EPS account only in two situations. According to the EPS rules, before leaving the job, the service history is less than 10 years or the employee has turned 58 years (whichever is sooner) then he can withdraw the pension fund money in a lump sum. Even if you are 58 years old, there is an option of EPS scheme certificate instead of withdrawing lump sum money. At the same time, the scheme certificate can be taken even when the employee has joined the job in some other organization or the service history is more than 10 years, in which case the scheme certificate is issued.
How EPFO Calculates Service History?
EPFO counts the year from the day you join the EPF scheme. However, it is not necessary that the service history is continuous. Meaning if you joined the EPF scheme in 2010 while working in a company. Changed job after working here for 3 years (2013). But EPF benefit is not offered in another company, because that company does not come under the purview of EPF. Here the employee worked for 4 years. In 2017, you again changed jobs and moved to a third company, where EPF scheme benefits are available. In such a situation, the calculation of your service history in EPS withdrawal till the year 2021 will be based on the years spent in the first and third company. In between, the history of the other company will not be counted. Meaning your service history will be considered as a total of 7 years. In such a situation, you can withdraw money from the pension fund in a lump sum.
How much money can be withdrawn from EPS account?
In the first 10 years of service (service history), the lesser amount you will be able to withdraw in a lump sum. Lump sum withdrawal from the EPS scheme is allowed only if the service is less than 10 years or at the time of retirement at the age of 58. In case of less than 10 years, you can withdraw money on the basis of Table D given in the EPS scheme 1995.
EPS-95 Table D Refund of Contribution on Leaving Job
| Service History (Years of Job) | Salary part on leaving the job (pension fund) |
| 1 | 1.02 |
| 2 | 1.99 |
| 3 | 2.98 |
| 4 | 3.99 |
| 5 | 5.02 |
| 6 | 6.07 |
| 7 | 7.13 |
| 8 | 8.22 |
| 9 | 9.33 |
How to get pension certificate?
On completion of 10 years of service, the employee can take a pension certificate. This certificate mentions the pensionable service, salary and the amount of pension to be given on leaving the job. If a person has a scheme certificate of service of 10 years or more, then he becomes entitled to monthly pension under EPS from the age of 58 years. However, he also has the right to apply for early pension from the age of 50. However, the monthly pension at the age of 50 will be less than the pension at the age of 58.
Will tax be deducted on EPS withdrawal?
According to AK Shukla, retired assistant commissioner of EPFO, lump sum withdrawal from EPS account comes under the purview of tax. However, in the Income Tax Act, the situation is not clear about how much this tax will be or on what basis it will be deducted. In the event of loss of job under the EPF scheme, the member has the option to close the account by withdrawing the entire amount. The entire amount can be withdrawn in lump sum from EPF and EPS accounts (provided the service years are less than 10 years) on closure of accounts (being unemployed for more than 2 months).
