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Employee Pension Scheme (EPS ) – Eligibility, Benefits and Calculation

by | Jun 18, 2024 | Income Tax | 0 comments

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Employee Pension Scheme (EPS) – Eligibility, Benefits and Calculation

The Employee Pension Scheme (EPS), launched by the Employees Provident Fund Organisation (EPFO) in 1995, is designed to ensure financial security for salaried employees during retirement by providing a steady income stream. This scheme becomes accessible to employees after completing 10 years of service and reaching the age of 58.

Under EPS, employers contribute 12% of an employee’s salary to their EPF account. This contribution is split, with 8.33% allocated to EPS and 3.67% to EPF. Notably, the EPS contribution is calculated based on the actual salary if it’s below INR 15,000 per month; if higher, it’s computed on a maximum of INR 15,000. This makes the maximum monthly EPS contribution INR 1,250.

EPS ensures that employees receive a pension that is proportionate to their length of service and average salary, offering a reliable income source post-retirement. Understanding these aspects helps employees plan effectively for their financial futures, ensuring they benefit fully from the provisions of EPS as part of their overall retirement planning through EPF.

What is the Eligibility Criteria to Avail Employee Pension Scheme Benefits?

To qualify for Employee Pension Scheme benefits, certain conditions must be met. First, an individual needs at least 10 years of service and must be a member of EPFO (Employee Provident Fund Organization). The standard retirement age for accessing pension benefits is 58 years. However, it’s possible to withdraw the EPS balance starting at age 50.

Additionally, there’s an option to extend pension benefits up to age 60, which offers an increase of 4% per year for those who opt for this extension. If someone has worked for less than 10 years but is unemployed for more than two months, they can still withdraw from their Employee Pension Scheme.

How is the Pension under the Employee Pension Scheme Calculated?

Under the Employee Pension Scheme, the pension amount a person receives is calculated based on their pensionable salary and pensionable service. The monthly pension is determined using a formula that divides the pensionable salary by 70 and multiplies it by the pensionable service in years.

For instance, if Purva’s monthly salary is INR 15,000 and her EPS contribution rate is 8.33%, her pensionable salary would be approximately INR 1,250 per month. Assuming her pensionable service is 9 years and 7 months, her pensionable service period is considered as 10 years. Therefore, her estimated monthly pension would be INR 2,142.85.

The Employee Pension Scheme offers several types of pensions:

  1. Widow Pension: This pension is granted to the spouse after the employee’s death. The widow receives this pension until her death or remarriage, with a minimum amount set at INR 1,000.
  2. Child Pension: Dependent children of the deceased employee receive 25% of the widow pension until they turn 25 years old. This pension is provided concurrently with the widow pension.
  3. Orphan Pension: In the absence of a surviving spouse, orphan children receive up to 75% of the widow pension. This benefit is available to a maximum of two surviving children, allocated from oldest to youngest.
  4. Reduced Pension: Employees who opt to withdraw their pension from the age of 50 onwards receive a reduced pension amount. The reduction is calculated at 4% for each year less than the retirement age of 58. For example, withdrawing at age 55 results in a pension amount reduced to 88% of the original pension.

How can I check my Employee Pension Scheme amount?

Follow the below-mentioned steps to check your EPS amount at any given point:

  1. Visit Employees Provident Fund Organisation Portal
    Go to Employees Provident Fund Organisation Portal
  2. Click on ‘Services’
    Now click on ‘Services’ 

    Employee Pension Scheme - Select Services from Homepage Dashboard
  3. Select ‘For Employees’
    Click on ‘For Employees’

    Employee Pension Scheme - Select 'For Employees'
  4. Go to Member Passbook
    Under ‘Services’ click on Member Passbook

    Employee Pension Scheme - Select Member Passbook to view your EPS balance
  5. Add your UAN and Passoword
    Enter your UAN and Password
  6. Select ‘Member ID’ and see you EPS Amount
    Click on the concerned Member ID and you can now see your EPS amount in your Pension Contribution columnView your Employee Pension Balance from the Passbook

You can also check your EPS amount in your EPS account passbook as well. You can download the passbook from the EPF pensioners portal.

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Official Income Tax Return filing website: https://incometaxindia.gov.in/

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