EPF pension technically known as Employees’ Pension Scheme (EPS) is a social security scheme provided by EPFO. The scheme provides provision for pension after retirement at the age of 58 years to the employees working in the organized sector. However, the benefits of the scheme can be availed only if the employee has rendered service for at least 10 years (not necessarily continuous). allowed to participate in the scheme.
Eligibility conditions
In order to avail benefits under the Employees’ Pension Scheme (EPS), an individual must fulfill the following conditions:
- He should be a member of EPFO
- He should have completed 10 years of service
- He must be 58 years old.
- He can also withdraw his EPS at a reduced rate on attaining the age of 50
- He can defer his pension for two years (up to the age of 60 years), after which he will get pension at an additional rate of 4% every year
How to calculate your pension under EPS
The pension amount in PF depends on the pensionable salary and pensionable service of the member. The monthly pension amount of the member is calculated according to the following formula:
Member’s Monthly Salary = Pensionable Salary X Pensionable Service / 70
Pensionable salary
The pensionable salary is the average of the monthly salary of the employee for the last 12 months before joining the pension scheme.
If there is a non-contributing period in the last 12 months of employment, the non-contributing days in the month will not be counted and the benefit of those days will be given to the employee. Suppose the person starts the job from 3rd of the month then his 28 days salary will be divided according to the salary of each day and then it will be multiplied by 30 to calculate the total monthly salary for the month.
If the person’s monthly salary is Rs 15,000, then that person’s salary for 28 days will be Rs 14,000 (less than Rs 500 per day for two days). However, the monthly salary considered for EPS is Rs 15,000 for 30 days.
The maximum pensionable salary is limited to Rs 15,000 per month.
Since every month the employer/company/company contributes 8.33% of the salary to the employee’s EPS account, then the amount deposited in the employee’s EPS account every month is,
₹15000 x 8.33/100 = ₹1250
Pensionable service
The actual length of service of the member is considered as pensionable service. The length of service rendered for different employers/companies/companies is added while computing the pensionable service period. The employee is required to obtain the EPS Scheme Certificate and submit this certificate to the new employer/company/company every time he changes jobs.
Keep in mind that the employee gets a bonus of 2 years after completing 20 years of service. .
If the member withdraws his EPS fund before completing the service period of 10 years or on joining any other company then he will have to start afresh for contribution to the EPS account and the service period will also be fixed as zero.
The pensionable service period is calculated on the basis of 6 months, i.e. the minimum pensionable service period is 6 months. If the service period is 8 years 2 months, then the eligible service period will be considered as 8 years. However, if the service period is 8 years and 10 months, then the pensionable service period will be treated as 9 years.
Pension benefits under Employees’ Pension Scheme (EPS)
All eligible members of EPFO can avail pension as per their age from the time they start withdrawing pension. The pension amount varies from case to case.
Pension on retirement at the age of 58
A member becomes eligible for pension benefits after he retires at the age of 58 years. However, it is mandatory for him to work for 10 years to avail the pension. An EPS Scheme Certificate is issued which can be used to fill Form 10D to be submitted for drawing monthly pension.
Pension on leaving service before being eligible for monthly pension
If a member is unable to remain in service for 10 years before attaining the age of 58 years, he can withdraw the entire amount by filling Form 10C at the age of 58 years. Keep in mind here that they will not get monthly pension benefits after retirement.
Pension on total disability during service
If any member of EPFO who becomes totally disabled, is still entitled to monthly pension, notwithstanding the fact that he has not completed the pensionable service period.
His employer/company/company has to deposit money in his EPS account for at least one month to be eligible for pension.
The employee becomes eligible for monthly pension from the date of permanent disability and is eligible for pension for the whole life. However, the employee may be required to undergo a medical test to check that the member is unfit for the work he or she was performing before becoming disabled.
Pension for the family on the death of the employee
The employee’s family becomes eligible for pension benefits in the following cases:
- On the death of the employee while in service and the employer/company credits the employee’s EPS account for at least one month
- If the employee has completed 10 years of service but dies before attaining the age of 58 years
- In case of death of the employee after commencement of monthly pension
Types of Pension under Employees’ Pension Scheme
There are different types of pension under EPS such as pension for widows, children and orphans. This pension provides an income to the family member of the EPF subscriber.
Widow Pension
Widow pension or old age pension is applicable to the widow of the eligible member. This pension amount will be payable till the death of the widow or her remarriage. In case of more than one widow, the widow who is older in age will get the pension amount.
Monthly old age pension amount depends on Table-C of EPS for the year 1995. Minimum pension amount has been increased to Rs.1000 now. has been done. 6,500 for pensionable members. As per the pensionable salary of Rs., the widow pension amount is calculated as per the table given below. Keep in mind that the monthly pensionable salary will be Rs. 15,000. and hence higher pension may be available:
| Monthly pensionable salary for widow pension amount ( ₹ ) | Monthly Widow Pension ( ₹) |
| 6200 | 2021 |
| 6250 | 2026 |
| 6300 | 2031 |
| 6350 | 2036 |
| 6400 | 2041 |
| 6450 | 2046 |
| 6500 | 2051 |
Child Pension
In case of death of the member, monthly child pension is applicable for surviving children in the family in addition to monthly widow pension. Monthly pension will be paid till the child attains the age of 24 years. The amount payable is 25% of the widow pension and can be paid to a maximum of two children.
Orphan Pension
If the member dies and there is no surviving widow, his children will be entitled to receive 75% of the value of monthly widow pension as monthly orphan pension. This benefit will be applicable for two surviving children, in order of greatest to least.
Reduced pension
An EPFO member can withdraw pension early if he has completed 10 years of service and has attained the age of 50 years but is less than 58 years. In this case, the pension amount is reduced at the rate of 4% for each year remaining to attain the age of 58 years.
If the member decides to withdraw the reduced monthly pension at the age of 56 years, he will get 92% (100% – 2×4) of the basic pension amount.
Pension Form
EPFO members or their dependents need to fill the following forms to get Employees Pension Scheme (EPS) benefits:
| EPS Form | Applicant | purpose of the form |
| Form 10C | Member | For withdrawal before the service period of 10 yearsFor EPS Scheme Certificate |
| Form 10D | Member | For monthly pension withdrawal after the age of 50For monthly widow pension, child pension etc. |
| life certificate | pensioner/guardian | The pensioner signs a form certifying that he is aliveThis form should be submitted every year in the month of November to the manager of the bank where his pension account is active |
| non-remarriage certificate | widow | To declare that the widow has not remarriedIt has to be submitted in November every year |
How to know your EPS amount
Members can check the amount deposited in their Employees’ Pension Scheme (EPS) account through the EPF pass-book. The last column of the passbook shows the EPS contribution deposited by the employer/company every month. On EPF Passbook Portal The passbook can be downloaded after login into the account using UAN and password.
Important points to remember about EPF pension
- All contributions made to the Employees’ Pension Scheme (EPS) account must be made by the employer/company
- For EPS, the employer/company contributes 33% of the employee’s salary.
- The salary of the employee includes – basic wages with dearness allowance, retained allowance and admissible cash value for food concessions
- The employer/company has to make his contribution within the last 15 days of every month
- The cost of all applicable contributions is borne by the employer/company
- The principal employer/company has to contribute directly or through a contractor to all the employees working for it
The minimum service period eligible to receive pension benefits is 10 years - If you have served more than 6 months and less than 10 years, you can withdraw your
- EPS amount if you remain unemployed for more than two months.
- As per the scheme, the retirement age of the employee has been fixed at 58 years.
- An employee ceases to be a member of the Pension Fund after attaining the age of 58 or starts receiving the reduced pension (at the age of 50)
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