Employees Provident Fund Organization i.e. EPFO runs Employees Pension Scheme i.e. Employees Pension Scheme (EPS) for its members. Under this scheme, EPFO members get monthly pension after a period of time on the basis of their service period and salary. Employees Pension Scheme (EPS) was started by EPFO on 16 November 1995. It has replaced the Employees Family Pension Scheme 1971.
In the Family Pension Scheme, the family received pension only on the death of the member. At the same time, in the Employees Pension Scheme, a provision has been made to give pension to EPFO members also. Apart from the EPFO member, in this new scheme, arrangements have been made to give pension to the family and nominee also. Launched in November 1995, the objective of this scheme is to provide regular income to organized sector employees after retirement.
Who will get the benefit of this pension scheme?
To get EPS pension, the employee has to fulfill certain conditions. First of all, the employee has to complete at least 10 years of service. Apart from this, the age of the employee should be at least 58 years, as pension under EPS starts from this age. The employee must be a registered member of EPFO and must contribute regularly to the EPS scheme throughout the entire period of their employment.
EPF members contribute 12% of their basic salary to the Employees Provident Fund (EPF) during their employment, and the company also contributes the same amount. Let us tell you that the company’s contribution is divided into two parts. In this, 8.33% share is deposited in EPS and 3.67% share is deposited in EPF. Since 2014, the Central Government has fixed the minimum pension under EPS-1995 at Rs 1,000 per month. However, it is being demanded that this pension should be reduced to at least Rs 7,500 per month.
Features of EPS scheme
Details about the main features of the Employees Pension Scheme can be seen below.
- Minimum service period to get pension: 10 years
- Age of commencement of pension: 58 years
- Minimum monthly pension: Rs 1,000
- Maximum monthly pension: Rs 7,500
According to the provisions of the scheme, a member of the pension scheme becomes entitled to pension on completing 10 years of contributory membership and can take pension on completing 58 years of age. Whether he retires from his organization or not, i.e. after attaining the age of 58 years and completing 10 years of contributory membership, an EPFO member can take pension even while working.
Apart from this, if a member leaves the job after completing 50 years of age, then he also becomes entitled to take pension at a reduced rate. Provided that the period of membership is at least 10 years.
Pension is calculated on a pro rata basis based on the pensionable service of the member i.e. the number of years he has contributed to the pension fund and the average salary of the 60 months preceding retirement.
If you want to know how much pension you will get, then go to the official website of EPFO www.epfindia.gov.in and click on EDLI & Pension Calculator option in the online services section visible on the left side of the screen. A new screen will open and you can know how to use this calculator by going to How to use EDLI & Pension Calculator visible on the front screen. And you can reach its home page by clicking on EDLI & Pension Calculator given on the left side.
Now you will reach the calculator by clicking on the Pension Calculator tab given above.
In this you can calculate your pension by entering your details.
It is worth noting that if a member has pensionable service of 20 years or more, then he is also given a bonus of 2 years.
Generally, pension is given to EPFO members on completing the age of 58 years. But if a member retires after completing 50 years of age and before completing 58 years, then he can take pension at reduced rates. According to the number of years the member’s age is reduced after 58 years, the pension will be reduced at the rate of 4% per annum.
If a member wishes, he can postpone it after 58 years till the age of 60 years. In such a case, he will get 4 percent increase in pension at the age of 59 years and 8 percent increase at the age of 60 years. If 10 years of pensionable service has been completed and the member is still in service after 58 years, he can continue to contribute to the pension fund till the age of 60 years. In such a situation, service and salary after 58 years will also be taken into account to calculate his pension. Due to which he will get more pension.
Now the question is that if an EPFO member has completed 10 years of service, then how much pension can he get after completing 58 years of age.
EPS pension calculation formula
Monthly pension is calculated using this formula:
Monthly Pension = (Pensionable Salary × Pensionable Service) / 70
- pensionable salary: Average salary of last 60 months (maximum Rs 15,000)
- pensionable service: Total service years contributed to EPS
For example, if an employee’s pensionable salary is Rs 15,000 and he has put in 10 years of service, his monthly pension will be as follows:
Monthly pension = (15,000 × 10) / 70 = Rs 2,143
This example shows that despite a minimum service period of 10 years, an employee can get pension, however if the period of service is longer, the monthly pension will also be higher.
So many types of pensions are available in EPS
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Superannuation Pension: When a member reaches the age of 58 years, he gets this pension.
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Early Pension: Pension can be taken between 50 and 58 years, but some deductions are made in it.
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Widow Pension: This pension is given to the wife or husband of the member who has died.
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Children’s Pension: This pension is given to the children of the member who has passed away.
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Orphan Pension: This pension is available when both the parents die and the children become orphans.
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disability pension: If an employee gets permanent disability, he gets this pension.
Benefits of EPS
EPS offers many important benefits to its members. It provides a lifetime income, from which the employee receives pension every month after retirement. If the member dies, this plan provides protection to the family, and the family gets pension benefits. EPS also includes disability cover, which means that if an employee gets permanent disability, he gets a pension. Additionally, EPS also has tax benefits, as this pension is exempt from income tax, making it an attractive option.
