Employee Pension Scheme (EPS)

The Employee Pension Scheme came into effect in the year 1995 for the convenience of the employees working under different organizations and companies. All the employees who come under the Employee Provident Fund Scheme are entitled to Employee Pension Scheme.

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About Employee Pension Scheme (EPS)

According to the latest changes made in EPS (Employee Pension Scheme) which is effective from 1st September 2014, the employee pension fund in India is distributed as 12% of the salary of the employee’s which is accumulated in the EPF account of the employee. For employee pension fund, 12% of the salary of the employer is divided into 3.67%, 8.33% for EPS, and 1.1% as admin charge for EPF, 0.5% for EDLI and 0.1% as EDLI admin charges. The minimum pension amount offered under employee pension scheme is Rs.1000 and all the employees whose salary is below 15,000 per month are mandatory to have EPF account. Employee deposit linked insurance scheme (EDLI) coverage for the employees’ has been increased from Rs. 1.56 lakhs –Rs.3 Lakhs.

  • If an individual is a member of EPF scheme then he/she can automatically enroll for EPS scheme.
  • Along with the contribution of the employer of 8.33% of the salary, the central government also makes a contribution towards employee pension scheme. 1.16 percent of the employee’s salary is contributed by the central
  • The EPS contribution made by the employee does not get any interest.
  • In 6 months intervals, the eligible service is computed. In case the employee has had more than 6 months service then it is calculated in the next year and if the employee has had less than 6 months service then it is calculated in the previous year.
  • The pension can be received lifelong and in case of the employee’s demise, it passes on two children and the spouse.
  • In order to avail pension under EPS, an individual is required to complete 10 years of service and must have reached 50 years of age for early pension and 58 years for a regular

How Employee Pension Scheme Work?

Only the employers can contribute towards EPS, the employee cannot contribute towards EPS directly. The employer’s contribution of 8.33% goes towards the employees’ pension scheme and the remaining 3.67% goes towards EPF. Hence, in total, including the contribution of the employees, 8.33% of the amount is contributed towards EPS and 15.67% is contributed towards EPF.

Features of Employee Pension Scheme (EPS)

Let’s take a look at some of the salient features of EPS.

  • In order to be eligible for EPS, one must have an EPF
  • Only the employers contribute towards EPS.
  • An individual can withdraw EPS amount depending on their duration of service and age. Moreover, the EPS can also be carried forward to the next job.
  • In case of a job change, only the employee pension fund is transferred to the new employer, whereas, the EPS is not transferred.
  • In case the employee changes his/her job the contribution made towards EPS is kept with the Employees’ Provident Fund Organization (EPFO).

You May also like to read: National Pension Scheme

Availing the Pension from EPS

The Pension of the employee under EPS is computed for 2 categories. The first category is for those who joined EPS before 15th November 1995 and the other is for those who have joined EPS after this date. In case the individual has completed 10 years of service then he/she is eligible to claim pension once they obtain the age of 50 or 58.

One can also avail pension through the process of superannuation wherein one is required to complete 10 years of service and can continue to work and is above 58 years of age. However, no fresh contribution to EPF will be made. An individual can take an early pension in case he/she has served 10 years of job, has obtained 50 or 58 years of age or is unfit for a job because of permanent/ total disability. In case of demise of the individual, the pension is provided to the spouse and two children less than 25 years of age of the person.

How to Claim Pension Amount

  • In case the individual has scheme certification of pension

Once the employee reaches 50 years of age, they are entitled to receive a pension by scheme certificate. In order to avail the regular pension, the employees are needed to fill from 10-D. In case, one holds more than one scheme certificate then they can directly visit the EPF office. However, one needs to get attestation done by the bank manager of the employee’s 10-D form.

  • In case don’t have scheme certification of pension

If the employee has not completed 10 years of a job then they can claim for the pension refund. In order to do so, the employee is required to fill the 10-C form and EPF withdrawal form and submit it through the employer.

Forms Related to Employee Pension Scheme

Form Name

Filled By

Benefits

Form 10C

Nominee or member

  • Scheme certificate
  • Withdrawal benefit

Form 10D

Member

  • To avail pension after 50 years of age but before 58 years.
  • To avail pension after 58 years of age.
  • To avail a disability pension.

Form 10D

The beneficiary or widower/widow or children

  • To avail family pension.
  • To avail beneficiary or dependent pension.
  • To avail orphan or children pension.

Life Certificate

Pensioner

  • To be submitted by nominee or children every November.
  • To be submitted pension disbursing bank manager.

Non-remarriage certificate

Widow/widower

  • To be submitted by widower annually.
  • To be submitted by the widow at the initiation of pension.
  • To be submitted pension disbursing bank manager
You may also compare: Saral Pension Yojana

EPS Withdrawal

  • In case an individual has served less than 10 years of service

The employee can withdraw the number of EPS even if they have not completed 10 years of service. However, if an individual is in service and has not completed 10 years then he/she cannot withdraw the EPS amount. EPS amount can only be withdrawn if the individual quits the company before joining the new company.

The individual can withdraw the savings of EPS on the EPFO portal by claiming Form 10C. The employee should have an active UAN and link it to the KYC details in order to withdraw the savings from the employee pension scheme. Based on the years of service one can only withdraw a percentage of EPS amount.

  • In case an individual has served more than 10 years 

If the employee serves more than 10 years of service than they can withdraw the EPS amount by filling Form 10C.

Terms & Conditions of EPS

Let’s take a look at some of the significant terms and conditions of the Employee Pension Scheme.

  • In order to avail pension under an employee pension scheme, it is mandatory for an employee to complete 10 years of service.
  • An individual can avail pension only if he/she has obtained 50 years of age.
  • It is not allowed to have more one EPF account.
  • The government contribution towards EPF is limited up to 1.16% of Rs.15,000. The maximum government contribution in a pension account is Rs.174.

You May also like to read: Retirement Planning in India

Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer. Tax benefit is subject to changes in tax laws. *Standard T&C Apply

Written By: PolicyBazaar - Updated: 04 August 2021
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