Employee Pension Scheme - EPS

About Employee Pension Scheme (EPS)

1995
As per the latest changes in the Employee Pension Scheme that are effective
since 1st September 2014, the EPF is distributed as 12% of the employee’s
salary goes into the EPF account and 12% of the employer's salary is divided
into 3.67% for EPF, 8.33% for EPS, 0.5% for EDLI 1.1% as EPF admin charges
and 0.01% as EDLI Admin charges. The minimum pension under EPS is Rs
1000 and EPF is mandatory for those employees drawing a salary less than Rs
15,000 a month. EDLI cover for each employee has been raised from Rs 1.56
Lakh to Rs 3 Lakh.

 Employees are automatically enrolled into the EPS  Scheme  only if

they are members of the EPF scheme.
 The central government also contributes to an employee’s EPS along
with employer contribution of 8.33% of the salary. Central government
contributes 1.16% of the employee’s salary but salary is considered as
basic pay plus daily allowance and is taken as a maximum of Rs 6500
 Contributions made to the EPS by the employee does not generate any
interest.
 Eligible service is calculated in intervals of 6 months. If an employee
has had a service of more than 6 months it is rounded to the next year and
less than 6 months is rounded to the previous year. For example if an
employee has had a service of 18 years and 8 months, the service is
considered as 19 months and if the employee has had a service of 18 years
and 4 months, the service is considered as 18 years
 Pension received is lifelong and passes on to spouse and two children
upon the employee’s death
 Employees can receive only pension from EPS and are eligible only
after completion of 10 years of service and must have attained the age of
50 years for early pension and 58 years for regular pension

Availing the pension

The employee pension under Employee Pension Scheme is calculated for 2
categories. One is for those who joined prior to 15th November 1995 and one
for those joining post this date. Upon completion of 10 years of service, a
person is eligible for the scheme certificate and can claim pension upon
attaining the age of 58 or 50. One can also withdraw the EPS amount as long
as they have not completed 10 years of service. Upon withdrawal, the
employee receives the employee and employer EPF contribution and the
interest earned on this EPF. The number of years served under 10 are
multiplied with a proportion of wages during exit
The employee can avail pension through superannuation where he/she has
completed 10 years of service, is above the age of 58 and can continue
working but no fresh EPF contributions will be made. They can take early
pension where they have finished 10 years of service, attained age of 50 to 58
and are not working, if the employee is unfit to perform the job due to total or
permanent disability and/or in case of death of the employee during or after
service. In cases of death, the pension will be paid to spouse and 2 children
below the age of 25

Who gets pension through EPS?

All employees of organized sectors can avail pension, provided he or she
contributes towards EPF. The Employee Pension Scheme or EPS is clubbed
with the Employee Provident Fund (EPF). The Government has now raised the
minimum pension amount in the EPS. A minimum of Rs.1,000 per month will
now be granted as pension to employees of the organized sector. Earlier
employees received a meagre pension of Rs.500, which made survival tough
for the employees

What is the contribution for EPS?

12.5% of the basic salary plus dearness allowance of the employee goes
towards EPF, according to PF rules. Given below are the contribution details
from the employee and the employer towards EPF, EDLIS and EPS.

Employee Social Security Scheme Employee Contribution

EPF (Employee Provident Fund) 12%

EPS (Employees’ Pension Scheme) Nil

EDLIS (Employees’ Deposit Linked Insurance) Nil

EDLIS administrative charges Nil

EPF administration charges Nil

 Calculating how much pension will you
get
Calculation of your monthly pension is not as complicated as it may seem.
95% of employees with a pension account receive only Rs.1,250 per month.
However, the calculation of pension for employees who were employed before
1995 and those employed after, is different.

Monthly pension calculation (Employed

after 16/11/1995)
The pension amount for those employed after 16th November, 1995 is
calculated as follows:

Pension amount = (Pensionable salary * Service period)/70

In order to calculate the monthly pension in this case, following points need
to be kept in mind:

 Pensionable salary is the average income of preceding 60 months. Most

employers have a restriction on pension contribution to either Rs.1,250 or
8.33%, whichever is minimum. In these scenarios, the maximum
pensionable salary would be Rs.15,000.
 Only the basic pay and dearness allowance is considered as salary.
 If an employee has completed over 20 years of service, then two years
should be added as bonus in the equation. According to the rules, the bonus
can be also applied for the service before 16/11/1995.
 The new rules make it mandatory for the pension to be more than
Rs.1,000 per month.
 An employee is eligible for pension after completion of 10 years of
service.

Monthly pension calculation (Employed

before 16/11/1995)
For employees who got jobs before 16th of November, 1995, the calculation of
pension is a little complicated. The pension is calculated in two parts.
Pension is calculated twice based on the period of employment. Once before
16/11/1995 and once after 16/11/1995. For calculation of pension before
16/11/1995, the following table can be used. In this table, pension is fixed
based on the pay and period of service.

Years of past service Up to Rs.2,500 (Salary) Above Rs.2

 Below 11 years 80 85

Between 11 to 15 years 95 105

Between 15 to 20 years 120 135

More than 20 years 150 170

Employees retiring after this date get an additional pension for the past
period. The above pension amount is enhanced by 8% for each subsequent
year

Claiming Pension Money

o If you have scheme certificate of pension
Once the employee crosses the age of 50, he or she is entitled to get pension
by Scheme Certificate. The employee is required to fill Form 10-D to avail
regular pension. If the employee has more than one Scheme Certificate, he or
she can directly go to the EPF office. This requires attestation of the
employee’s Form 10-D by the bank manager.

o If you don’t have scheme certificate of pension

In case an employee has not completed 9.5 years of service, you must claim a
pension refund. In order to do, you have to fill Form 10-C along with EPF
withdrawal form and submit it through your employer.

Terms & Conditions of EPS

Some of the important terms and conditions of the Employees’ Pension
Scheme are:

 An employee must complete a minimum of 10 years in service in order

to avail pension through EPS.
 An employee can only avail pension after he or she turns 50 years old.
 An employee cannot have more than one EPF account.
 Government contribution towards EPS cannot be more than 1.16% of
Rs.15,000. The maximum contribution from the government in a pension
account is not more than Rs.174.
 The provision for commutation of EPF pension is not available any
more.
 Forms related to Employee Pension
Scheme (EPS)
There are various forms that need to be submitted to avail different benefits
under EPS. They are:

Form name Filled by Benefit

 Withdrawal benefit
Form 10C Beneficiary or member
 Scheme Certificate

 To avail pension after 58 y

Form 10D Member  To avail pension before 58
 To avail disability pension

 To avail nominee or depend

Form 10D Nominee or widow/widower or Children  To avail family pension
 To avail children or orphan

 To be submitted by pension
Life Certificate Pensioner November
 To be submitted to the man

 To be submitted by widowe
Non-remarriage Certificate Widower/widow  To be submitted by widow
 To be submitted to the man

FAQ’s
1. I am 54 years old and a member of the Family Pension Scheme. I have
left my job on 13-12-93. I have already taken the withdrawal benefit. Am I
eligible to join the new scheme now?
Yes, you can join the new scheme, provided you refund the withdrawal
benefit along with the interest. Thereafter, you will be entitled to receive
pension after you turn 58 years old, if you complete a minimum of 10 years
of contributory service by then.

2. Can a 58 year old Family Pension Scheme Member who has retired on
15-01-94, avail pension under the new scheme?
Yes, if he or she has retired after reaching the age of 58 years, and between
01-04-93 and 15-11-95, the employee may join the new scheme after
returning the withdrawal benefit plus interest. The member is then entitled
to pension immediately, starting from the date of exit provided he has
completed 10 years of eligible service.

3. Can a member of the Employees’ Pension Scheme change his or her

nomination?
 Yes, a member of the EPS can change his or her nomination with the rules
for such nomination. It simply means that the nominee should be a family
member of the employee. Only if the employee has no family, then he or she
can nominate anyone else according to their wish.

4. Under the EPS, is employee the only beneficiary of the fund?

Benefit of the EPS is paid to the employee and in his or her absence, to the
family of the employee.

5. Is it possible to receive pension earlier than the age of maturity of the

EPS?
Yes, you may receive pension on turning 50, however pension payable from
that age will be reduced by 3% for every year falling short of 58.

6. How many years of service should a member of EPS complete in service

in order to be eligible for receiving pension?
An employee is entitled to receive pension only after completion of
minimum 10 years of eligible service.

News on EPS

 EPS Reform Demanded by Retirees

The Koshiyari Committee has been making recommendations since

2014, but they have been falling upon deaf ears so far as the
government is concerned. Among the recommendations made are the
increase in annual pension, availability of medical facilities, and a
minimum pension worth Rs.3,000. Since none of the recommendations
have been considered, the Sarva Shramik Sanghatana is expected to
collaborate with members of the Nivrut Karmachari Sangh (semi-
government and private sector pensioners) and conduct a protest so
that the government updates the EPS in a way that pensioners can
benefit. The protest is expected to see the pensioners demand for an
increase in the minimum pension to Rs.9,000 among other demands.
3 July 2018

 Good news for Employees’ Pension Scheme Pensioners

The minimum monthly payments under the EPS (Employees’ Pension

Scheme) of the EPFO (Employees’ Provident Fund Organization) are
likely to be doubled to Rs.2,000 by the government very soon. This
decision has been taken to ensure that the social security net for the
pensioners is nourished.
If the plan is realized it is going to benefit around 4 million people at an
annual cost of Rs.3,000 crore, which is to be borne by the Center.
Currently, there are around 6 million people enrolled under EPS-95. Out
of them only around 2 million get more than Rs.1,500 per month. Trade
unions and the All India EPS-95 Pensioners Sangharsh Samiti had kept
the government under pressure for quite some time to raise the
minimum monthly payout to Rs.3,000 -Rs.7,500.
17 May 2018