Employee Pension Scheme (EPS)

Key Features &Contributions of EPS-95

The Employee Pension Scheme (EPS) is a social security scheme for employees. Under this pension plan, eligible employees receive a regular monthly pension after retirement. Some of the features and contributions are: 

• Automatic Enrollment: EPF members are automatically enrolled in EPS with no separate registration required.
• Contribution Split: Out of the employer's 12% contribution, 8.33% goes toward the EPS pension fund (capped at a statutory wage ceiling of ₹15,000/month, i.e., max ₹1,250/month). The remaining 3.67% goes to the employee's EPF account.
• Government Contribution: The Central Government contributes an additional 1.16% of basic wages toward the pension fund.
• Salary &Service Linked: Pension payouts are calculated based on the employee's average pensionable salary and total years of eligible service.

Eligibility for Employee Pension Scheme

There are three main requirements to be eligible for benefits under the Employee Pension Scheme:

• Eligibility: EPFO membership with at least 10 years of service.
• Standard Pension (Age 58): Full pension begins at retirement.
• Early Pension (Age 50–57): Reduced by 4% per year drawn early.
• Deferred Pension (Up to Age 60): Increased by 4% per year delayed past 58.
• Disability Pension: Paid immediately upon permanent disablement (no 10-year service minimum required).

Eligibility to Withdraw Pension Contribution in EPS

Withdrawing your pension contribution from the Employee Pension Scheme (EPS) depends on your employment status and service period. You can learn more about different scenarios below:

• While Working: Lump-sum withdrawal is strictly prohibited.
• Unemployed (<10 yrs service): Full lump-sum withdrawal allowed via Form 10C after 2 months of unemployment.
• Unemployed (10+ yrs service): Cash withdrawal is not allowed. You earn a lifelong pension starting at age 58 (or age 50 as an early reduced pension).
• At Age 58 Retirement: Full cash payout via Form 10C (if service < 10 yrs) or monthly pension via Form 10D (if service ≥ 10 yrs).
• Decease or Disablement: Nominees receive death/pension benefits; permanently disabled members receive a disability pension without needing the 10-year service minimum.

How to Calculate EPS Pension Amount?

1. EPS Pension Formula:

   EPS Monthly Pension = (Pensionable Salary × Pensionable Service) ÷ 70

   Definitions:

   • Service Period: Total years of EPS contributions (minimum 10 years needed). Gets a +2 year bonus for 20+ years of service.
   • Pensionable Salary: Average basic pay + DA over the last 5 years (60 months), capped at ₹15,000/month for standard contributions.
   • Employer Contribution: 8.33% of basic pay (capped at max ₹1,250/month under standard rules).

2. Pensionable Service

   EPS Pensionable Service Pointers:

   • 10-Year Minimum: Required for a lifetime monthly pension at age 58.
   • Calculation Formula: (Pensionable Salary x Pensionable Service) / 70
   • Rounding Rule: Service of 6 months or more rounds up to 1 full year; under 6 months is ignored.
   • Continuity: Service history transfers across employers using a Scheme Certificate.
   • Short Service (<10 yrs at 58): Eligible for full lump-sum EPS withdrawal via Form 10C instead of a monthly pension.

Types of Pension in EPS

The Employee Pension Scheme (EPS) offers various pensions to provide financial security after retirement or in case of a member's death. Here are the main types of pensions under EPS:

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Pension Benefits Under EPS

The following are the EPS pension benefits for eligible individuals under this EPFO pension scheme:

1. Monthly Pension:

   • Superannuation Pension: Begins at age 58.
   • Reduced Pension: Available from age 50 with proportionate reduction.
   • Disability Pension: Available regardless of service length if permanent total disability occurs.

2. Family Pension:

   • Payable to the nominee upon the member's death.
   • Includes spouse and children up to age 25.

3. Additional EPS Pension Benefits:

   • Orphan pension: Paid to surviving children if both parents pass away.
   • Widow pension: Paid to the spouse until death or remarriage.
   • Nominee pension: In the absence of a spouse and children, pension goes to the nominee.

EPS Pension Forms

EPS (Employee Pension Scheme) forms are typically related to the Indian Employees' Provident Fund (EPF), which is a social security scheme provided by the government to employees. 

The EPS is a part of this scheme that provides pension benefits to employees. Here are some common EPS forms:

Process to Check EPS Balance

To check your Employee Provident Fund (EPF) balance, you can follow these steps:

1. Online via EPFO Passbook Portal

   • Step 1: Visit the official EPFO Member Passbook Page.
   • Step 2: Enter your Universal Account Number (UAN), password, and the captcha code to log in.
   • Step 3: Select your specific Member ID (for your current or past employer) to open your passbook.
   • Step 4: Scroll down inside the passbook details to find the Pension Contribution column, which displays monthly credits and running totals deposited into your EPS account by your employer.

2. Online via UMANG App

   • Step 1: Open the UMANG App on your mobile phone and search for EPFO in the services section.
   • Step 2: Tap on View Passbook.
   • Step 3: Enter your UAN and submit the OTP sent to your registered mobile number.
   • Step 4: Select your Member ID to review your passbook and check your total pension contributions.

   IMPORTANT NOTE: Always ensure you are accessing the EPFO pension services through official channels to avoid any fraudulent activities.  Additionally, keep your UAN and other credentials confidential to protect your account's security.

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How EPS Works When You Change Jobs

When you change jobs, your retirement savings in the Employees' Pension Scheme (EPS) do not move directly. Let us understand how it works:

• Monetary Transfer: EPS funds do not physically move as cash. The monetary balance stays in the central EPFO pool while your total service tenure accumulates.
• UAN Integration: Your Universal Account Number (UAN) links all past and present service records under one umbrella.
• Service Continuity: When you submit an online PF transfer (Form 13) on the EPFO portal, your past service months combine automatically to help you reach the 10-year pension eligibility mark.

Options for Service Under 10 Years

• Scheme Certificate: You can apply for a Scheme Certificate (via Form 10C) to carry forward past service years to a new job.
• Withdrawal Benefit: If you leave the workforce or remain unemployed for 2+ months before completing 10 years of service, you can withdraw your eligible EPS amount using Form 10C.

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Conclusion

The Employee Pension Scheme (EPS) is a crucial retirement benefit that provides lifelong financial security to employees and their families. Understanding its eligibility rules, pension calculation, and withdrawal conditions can help you make informed retirement decisions and maximise long-term benefits.