Things Every PF Account Holder Should Know About EPS

Employee Pension Scheme (EPS) is a social security measure which has provisions of a government guaranteed pension for the employees working in the organized sector. EPS is provided by Employee Provident Fund Organization (EPFO) after the retirement of the employee at the age of 58 years. The scheme first came in existence in 1995 and all the members of EPF get automatically enrolled for EPS.

Interestingly, EPS members are entitled to receive the pension on a permanent basis as the pension amount will get transferred to the family members/nominee after the death of the employee. However, apart from the mandatory membership to EPF, there are certain other criteria that should be met before availing benefits under EPS.

EPS Features

• The minimum monthly pension amount under EPS is Rs.1000 and maximum is Rs 7500.
• An employee does not contribute to EPS directly. It is the employer who contributes 8.33% of the salary (basic+ DA) of the employee (capped at Rs.15,000) towards EPS. Therefore, the maximum monthly contribution to your EPS account cannot be more than Rs.1250.
• Your EPS savings do not earn any interest. Further, if you have switched jobs and withdrawn your EPS savings from any account then those service years will not be counted for the rest of the EPS account’s service tenure calculations.
• If you have not been in service for a minimum of 10 years, you are not eligible for the EPS pension but you can withdraw it as a lump sum. However, if you have not even completed six months (180 days) of service, you can not even claim EPS withdrawal.
• It is a lesser known fact that if you have completed at least 10 years of service, then you are not eligible to withdraw your EPS savings. In that case, you need to apply for your EPS scheme certificate.
• The pension amount of the employee after his retirement depends on his salary and service tenure. It is to be noted that an employee gets a bonus of two years in pensionable service calculation of EPS after completing 20 years.
• No pensioner can receive more than one pension under EPS. Therefore, if you have worked in multiple organizations and have more than one EPS account than you need to consolidate all the EPS accounts into one account. Then only, you can apply for EPS pension.
• The maximum service period that is considered for EPS calculations cannot be more than 35 years.
• EPS pension is taxable and considered under the head of Income from Salaries.
• Employee’s Monthly Pension Formula = (Pensionable Salary* Pensionable Service )/70

Eligibility Criteria for EPS

• One must be an EPF account holder in order to avail benefits under EPS.
• The employee must have been in service for a minimum tenure of 10 years cumulatively.
• The employee should have attained the retirement age of 58 years to start receiving the pension. Though the beneficiary can claim the pension at the age of 50 years also but in that case, there will be a reduction in the amount of pension and hence, would be known as “Reduced Pension”.
• Similarly, the employee can also defer the date of pension reception till the age of 60. In that situation, the creditable pension will rise by 4% for every deferred year.

How to Apply for EPS Pension?

• Once you complete 10 years of service as per your EPF records, you become eligible to get an EPS certificate which you need to produce after completion of 58 years to get regular pension. You can also use this certificate to claim a reduced pension after 50 years of age. You need to fill up Form 10D to start the pension.
• Under the existing rules, an employee who resigns from the job before he turns 58 can withdraw 75% of EPS balance if he remains unemployed for 30 straight days or more after leaving the last job. He can claim the balance 25% after being unemployed for another 30 days. For all practical purposes, moving to the unorganised sector, self-employment or to a non-EPF registered firm will be considered unemployment.
• EPFO has simplified the withdrawal procedure by making it available online. So if you are an EPF member having a UAN linked with your aadhaar, then you can simply raise your claim online by EPF UAN Member Portal.
• In case, you have not completed 10 years of service, then you can withdraw EPS savings by furnishing Form 10C.