The Employee Pension Scheme (EPS), launched in November 1995, is a social security initiative managed by the Employees' Provident Fund Organisation (EPFO). EPS is designed to provide financial stability post-retirement; the scheme applies to employees of factories and establishments governed by the 1952 Miscellaneous Provisions Act and Employees' Provident Funds.
Let’s explore the EPS meaning, its benefits, eligibility, and how you can check and calculate your EPS balance.
The Employee Pension Scheme (EPS), also called EPS 95, was introduced on 19th November 1995. This scheme ensures that employees can benefit from a pension after their retirement.
The EPS is available for both new and existing EPF members.
Contribution Structure:
Employees contribute 12% of their basic salary and Dearness Allowance (DA) entirely to EPF.
Employers contribute 12%, of which 8.33% is allocated to EPS, and the remaining 3.67% goes to EPF.
The Central Government adds 1.16% of the employee’s salary to the EPS fund.
Employers play a crucial role in ensuring smooth administration and contributions under the EPS:
1. Monthly Contributions: Employers must remit 8.33% of the employee’s basic salary and DA to the EPS within 15 days of each month’s close.
2. Government Contribution: The government contributes 1.16% of the employee’s salary to the EPS.
3. Inclusivity: Employers must contribute to all employees, including those employed through contractors.
4. Disability Cases: If an employee becomes disabled during service, the employer must deposit funds for at least one month to make them eligible for a pension.
5. Administrative Costs: All administrative costs are borne by the employer.
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To avail of employee pension scheme benefits, employees must meet the following criteria:
1. Minimum Service: Employees must complete a minimum of 10 years of service.
2. Retirement Age: The standard retirement age is 58 years.
3. Early Pension: Employees can withdraw a reduced pension from 50 years onwards.
4. Shorter Service: Employees with less than 10 years of service but over 6 months can withdraw their EPS amount if unemployed for over two months.
5. Disability Benefits: Employees disabled permanently or totally are eligible for a lifetime pension, even if they haven’t completed the minimum service period.
6. Family Pension: In case of the employee’s death, the family becomes eligible for pension benefits.
Your pension amount depends on pensionable salary and pensionable service:
The Formula for Monthly Pension Calculation:
Member’s Monthly Pension = (Pensionable Salary x Pensionable Service) / 70
1. Pensionable Salary:
This is the average monthly salary over the last 12 months of employment.
Non-contributory periods in the last 12 months are excluded.
The maximum pensionable salary has been increased from ₹6500 to ₹15,000 per month.
Example: If an employee earns ₹15,000, their employer contributes 8.33% of ₹15,000, which amounts to ₹1250 monthly to EPS.
2. Pensionable Service:
This is the total service period across all employers.
Employees receive a 2-year bonus after completing 20 years of service.
The service period is rounded to the nearest 6 months.
Example: An employee with 8 years and 2 months of service will have a pensionable service period of 8 years. For 8 years and 10 months, the period becomes 9 years.
You can check your EPS balance easily through online or offline methods:
1. Using the EPFO Portal:
Visit the EPFO website.
Log in with your Universal Account Number (UAN) and password.
Navigate to the “Pension Account” section to view your EPS details.
2. Via UMANG App:
Download the UMANG app.
Register using your mobile number linked to UAN.
Access the EPS balance under the “EPFO Services” section.
3. Through Employer Records:
Contact your employer’s HR department for EPS details.
4. EPS Statement:
Request a pension contribution statement from the EPFO or your employer.
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The EPS offers various types of pensions to support employees and their families:
1. Widow Pension:
Payable to the widow until death or remarriage.
In the case of multiple widows, the eldest receives the pension.
2. Child Pension:
Paid to surviving children (up to 2 children) until they reach 25 years.
Each child receives 25% of the widow’s pension.
3. Orphan Pension:
Payable to surviving children when there is no widow.
Each child receives 75% of the widow’s pension.
4. Reduced Pension:
Employees can withdraw a reduced pension after completing 10 years of service and reaching 50 years.
The pension amount reduces by 4% per year for every year before 58 years.
Example: An employee retiring at 54 years will receive 84% of the original pension amount.
To access the benefits of the Employee Pension Scheme (EPS), the designated form must be completed by the member or the EPFO member's survivors.
|
EPS Form |
Applicant |
Form Purpose |
|
Form 10C |
Member |
|
|
Form 10D |
Member |
|
|
Life Certificate |
Pensioner/ Guardian |
|
|
Non-Remarriage Certificate |
Widow/ Widower |
|
The EPS offers numerous advantages, ensuring financial security for employees and their families:
1. Post-Retirement Income: Provides a fixed pension from the age of 58 years.
2. Disability Pension: Offers a monthly pension to employees disabled during service, even without completing the minimum service period.
3. Early Pension Option: Allows withdrawal of a reduced pension from 50 years.
4. Family Support: Provides pension benefits to the employee’s family in case of death before or after retirement.
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The Employee Pension Scheme (EPS) is a critical financial safety net for employees, offering retirement security, disability benefits, and family support. By understanding the scheme’s structure, eligibility, and benefits, you can ensure financial stability for yourself and your family. Start tracking your EPS balance today and secure your retirement future!
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