As discussed in our article Basics of Employee Provident Fund: EPF, EPS, EDLIS 12% contribution from your side goes to EPF, but the 12% contribution which your employer makes, out of that 8.33% actually goes in EPS (subject to maximum of Rs 541 and after Oct 2014 Rs 1250) and the rest goes into EPF. But there is more to Employee Pension Scheme such as how much pension can one get(maximum after 35 years of service is Rs 3250), EPS portion does not earn any interest, after 10 years you cannot withdraw instead you get scheme certificate, withdrawal amount depends on number of years of service. We shall answer these questions in this article. This post is dedicated to our reader Afsheeen who made us look more into EPS.
Table of Contents
What is Employees’ Pension Scheme (EPS)
Employees’ Pension Scheme (EPS) of 1995 offers pension on disablement, widow pension, and pension for nominees. EPS program replaced the Family Pension Scheme (FPS) of 1971. When an employee joins an establishment covered under the Employees Provident Funds & Miscellaneous Provision Act, 1952 (s)he becomes a member of Employees Provident Fund Scheme (EPF), Employees’ Pension Scheme (EPS) 1995, Employees Deposit Linked Insurance Scheme (EDLIS ) , 1976 . The EPS act in pdf format can be read at EPFO’s EPS webpage or Employees’ Pension Scheme, 1995 (pdf) and FAQ on EPS at EPF webpage. It’s main features are:
- It is financed by diverting 8.33% of employer’s monthly contribution from the EPF. Monthly contribution to EPS is restricted to 8.33% of 6500 or Rs 541 p.m and after Oct 2014 Rs 1250 8.33% of 15,000. Government’s contribution of 1.16% of the worker’s monthly wages if salary less than Rs 6,500.
- Unlike the EPF contribution EPS part (8.33% out of 12% contribution from your employer or Rs 541 and after Oct 2014 Rs 1250 what ever is minimum) does NOT get any interest.
- The fraction of service for six months or more shall be treated as one year and the service less than six months shall be ignored. So 9 years and 6 months will be rounded upto 10 years.
- Lifelong pension is available to the member and upon his death members of the family are entitled for the pension.
- A employee can start receiving the pension under EPS only after rendering a minimum service of 10 years and attaining the age of 58/50 years.
- No pension is payable before the age of 50 years.
- Early pension can be claimed after 50 years but before the age of 58 years. But it is subject to discounting factor @ 4% (w.e.f. 26.09.2008) for every year falling short of 58 years. In case of death / disablement, the above restrictions doesn’t apply.
- The maximum Pension per month is subject to maximum of Rs 3,250 per month.
- Maximum service for the calculation of service is 35 years.
- No pensioner can receive more than one EPF Pension.
Earlier there was a provision under EPS allowing commuting of one third of monthly pension by paying 100 times the original monthly pension. However, the amended scheme from 26 Sep’ 2008 doesn’t allow it anymore.
Table below gives the rates of contribution of EPF, EPS, EDLI, Admin charges in India.
|Scheme Name||Employee contribution||Employer contribution|
|Employee provident fund||12%||3.67%|
|Employees’ Pension scheme||0||8.33%|
|Employees Deposit linked insurance||0||0.5%|
|EPF Administrative charges||0||1.1%|
|EDLIS Administrative charges||0||0.01%|
The purpose of the scheme is to provide a pension in the following situations:
|Superannuation||Age 58 years or More and atleast 10 years of service||The member can continue in service while receiving this pension.On attaining 58 Years of age, a EPF member cease to be a member of EPS automatically|
|Before superannuation or Retiring Pension/Early Pension||Age between 50 and 58 years and atleast ten years of service||The member should not be in service|
|Death of the member||Death while in service: Atleast 1 months serviceDeath while not in service: (Now not in service)Age less than 58 years and Holding valid Scheme certificate or proof of service||In case of died member having family, pension is payable to (1) the spouse and (2) two children below 25 years of age. When a child reaches 25 years of age, the third child below 25 yrs of age will be given pension and so on.– If the child is disabled, he may get pension till his death.– In any case, only 2 children will receive pension at a time.In case of member not having family, pension is payable to single nominated person.– If not nominated and having dependend parent, pension is payable first to Father and then on father’s death to Mother.|
|Permanent Total Disablement Pension||Permanent disability||Permanently and totally unfit for the employment which the member was doing at the time of such disablement|
Note: As per Updated document of EPS( EPS 1995 (pdf)) on 2008 eligible period of service has be changed to 10 years from 20 years. Hence Short service Pension which was Member has to render eligible service of 10 years and more but less than 20 years is no longer valid.
What Happens to EPS on Transfer of EPF account?
Transfer of EPS on Transfer of EPF from one company to another. If EPF gets transferred the EPS also gets transferred though UAN passbook shows amount as 0. One of us had transferred the EPF from earlier company to new company. While EPF withdrawal was done there was no information about EPS withdrawal. We asked UAN helpdesk about EPS transfer and the response we got the same day after submitting our request was as follows
WHILE TRANSFERRING PF FROM ONE ESTABLISHMENT TO ANOTHER, THE SERVICE DETAILS INFORMATION (VIZ LENGTH OF SERVICE, NON-CONTRIBUTORY PERIOD, LAST WAGES DRAWN ETC) ARE FURNISHED TO THE RECEIVING PF OFFICE IN ANNEXURE-K WHICH WILL BE USED TO CALCULATE PENSION BENEFITS. AMOUNT IN PENSION FUND IS NOT REQ”.
UAN passbook will show the transferred amount of EPF but duration of job,Actual Servie, will be noted in passbook as shown in image below.
Calculation of Pension from EPS
Minimum Pension you will get Rs 1,000. Our article How much EPS Pension will you get with EPS Pension Calculator explains it in detail with examples.
For a member who joined EPF before 15.11.1995 have 3 components in Pension calculation:
(a)Past Service Benefit (b)Pensionable Service Benefit (c)Proportionate Reduction
- Past Service : means the period of service rendered by an existing member from the date of joining Employees’ Family Pension of 1971 till the 15th November, 1995.
- Pensionable service means period of service rendered from 16 Nov 1995.
- Proportionate reduction: if the past service is less than 24 years and past service benefit + Pensionable service pension is less than Rs.500.
For those who joined after 15.11.1995 only Pensionable Service Benefit is applicable
Pension depends on your contribution to Pension Fund and your service. You may be drawing very high salary, but your contribution to Pension Fund will be only Rs. 541 and and after Oct 2014 Rs 1250 max. This is because, as per EPF scheme, employer has to remit 8.33% of actual salary or of Rs. 6500 or 15,000 whichever is minimum. If your contribution in terms of amount or number of years is less, your pension will be less. . Your company can contribute more with permission. EPF Goa has details on how to get more pension.
Note: If no wage is earned for a certain period, that period is to be deducted from the service (as there will be no contribution to Pension Fund). Maximum pension is calculated as follows
Mr R.Kapoor started his job on 15th Nov 1995. He works for 35 years. His average salary=20,000/- per month but for pension service maximum salary considered is Rs 6,500. So Mr. Kapoor’s pension from 16.11.2025 will be
Rs (6500 X 35)/70 = Rs 3250/month.
You may calculate your possible approx. pension amount by using Approximate Pension Calculator.
Withdrawal of EPS
If the total service of the employee is less than 9.5 years, (s)he is not entitled to pension so he can apply for Withdrawal benefit ie Pension Fund Money back. Once, the service period crosses 10 years, the money withdrawal option ceases you can only get a Scheme Certificate which (s)he can use to get a pension from the age of 50 years.
EPS Withdrawal for less than 6 months
if you work less than 6 months then you cannot withdraw your Pension amount. You can transfer the same to your new company.
EPS and Scheme Certificate
If the total service of an employee is more than 9.5 years and the age of the employee is less than 50 years of age, (s)he can only claim a scheme certificate. (S)He can add services at different companies to calculate the total service. (S)he can get a pension from the age of 50 years. If (s)he has a scheme certificate for all services, he may apply directly at EPF which covers the area where the bank (SBI, Canara, Syndicate,) is situated. He needs to fill Form 10-D, get the form attested by that bank manager with photo and other required documents which is mentioned in the Form-10D itself.
Withdrawal of EPS
If the total service of an employee is less than 9.5 years and the age of the employee is less than 50 years of age then only one can withdraw the EPS amount in cash. But unlike EPF which when you withdraw you always get 100% of your EPF part, for EPS withdrawal amount depends on Average salary and total service, NOT related to actual Balance in the Pension Fund. The withdrawal amount is governed by what is called Table ‘D’.
|Years of service||Proportion of wages at exit|
Note that the table D is upto 9 yrs only, because if 10 yrs are crossed, then you are liable for pension.
So if Ms. Priya Sharma’s monthly salary is Rs 40,000 per month but for purpose of pension only Rs 1250(earlier 541) p.m or Rs (15,000 earlier 6,500) annually is considered. If she withdraws after 3 years her annual pension will be
= Proportion corresponding to 3 years of service from Table D * 6500
= 3.10 * 6500 / 3.10 * 1250
How to Claim Pension from EPS
For pension, withdrawal benefit, scheme certificate etc. application should be through ex-employer. For pension, Form 10D(pdf format) is to be used. For withdrawal benefit & scheme certificate fill Form 10 C(pdf format) which is also available with the HR department
If you have scheme certificate for all of your service, you may apply directly at EPF which covers the area where your bank (SBI,Canara,Syndicate,….) is situated after attesting the filled up Form-10D by that bank manager with photo and other required documents which is mentioned in the Form-10D itself.
Frequently Asked Questions we came across.
Q: I worked in a company for exactly 1 year(12 months) My Basic salary was 1,20,600 and deduction for PF from my salary was 1206 P/M. As I know equal deduction should be include by the employer. However I was told at the time of joining that the deduction of employer will also be deduct from your salary and It will be not displayed in your salary slip.
The PF amount I received against the EPF A/C is 21518+6630=28148 i.e however less then the actual amount credited as a pf contribution including both employee and employer that should be 28948.
Ans : Total amount in EPF will be your contribution (A), Employer’s contribution (B) and interest. In your case basic salary of Rs.1206/per month, PF and EPS contribution will as follows:
- A) Your 12 months PF contribution will be – Rs. 14472 (i.e. 1206 X 12)
- B) Employer’s 12 months PF contribution will be – Rs. 7980 (i.e. 665 X 12)
- C) Employer’s 12 months EPS contribution will be – Rs. 6492 (i.e. 541 X 12) or 15,000 (i.e 1250 *12) after Oct 2014
In my opinion your credited EPS amount of Rs.6630 is correct, if your service is exact 1 year (i.e. 6500 X 1.02) Source: citehr query on EPF and EPS withdrawal
Q: Employee is a member of Employees’ Pension Scheme. He/She has left employment at 48 yrs. of age and 8 yrs. of service. When shall he/she receive his/her pension?
Ans: He/She can take either withdrawal benefit or can take scheme certificate so that the 8 years service can be added to any future service that he / she may put in, in any other covered establishment. By virtue of being a holder of a scheme certificate, if the member dies before 58 years widow / widower and children shall be entitled for pension.
- Basics of Employee Provident Fund: EPF, EPS, EDLIS
- EPF Refund and Bank Account Problems
- What are EPF,Pension and Insurance Changes from 1 Sep 2014
- UAN or Universal Account Number and Registration of UAN
Note: The article is for educational and informational use and do not construe this as professional financial advice. Check out our Disclaimer.
Hope this article helped in understanding Employee Pension Scheme or EPS. Maximum pension after 35 years of service can only be Rs 7500(3,250) per month! If you have a scheme certificate that you can share please let us know. What are your thoughts on EPS, EPF?