It is quite common in almost all organization to PF contribution to employees account. Which known as Employee provident fund scheme. And it is bundled with another retirement benefit called Employees Pension Scheme (EPS). Many of employees do not aware of what all about it is. After reading this I would like to readers know about EPS benefits, features, conditions for transfer/ withdrawal. Which is must to plan one’s finances well. Let's dive into the details.
About the EPS - Employees Pension Scheme
Employees Pension scheme is a retirement benefit scheme. Was Introduced to provide the monthly fixed income after the retirement (58 years age) throughout the life. All Employees who enrolled in EPF scheme would automatically become members of the EPS as well. An amount equivalent to 8.33% of employer monthly contribution would be credited in employees EPS account. However no interest is provided for the balances in EPS account unlike balances EPF account.
Transfer of EPS balances when changing organization
Balances in EPS account cannot be transferred to current employer ID from previous employers ID. EPS Balances continue to lie in respective employers ID. You can transfer balances in EPF account of previous employer to current employer ID.
Conditions for EPS Withdrawal
Employees’ eligible to withdraw EPF balances if they completed 10 years of service. Employees eligible to withdraw EPF balances even before completion of 10 years of service, if they unemployed for 2 months or more.
Conditions for Entitlement of Pensions
Employees eligible to get monthly pension if they completed 10 years of service & attained 58 years of age. Employees eligible to get monthly pension even at the age of 50 years at reduced pension.
Calculation of Monthly Fixed Pension
Pension = (Pensionable salary X Pensionable service) / 70
Pensionable Salary = Average Salary (Basic + DA) of last 60 months. Maximum of Rs.15K
Pensionable Service = No. of years of service. Maximum of 35 years
Example:
Mr. A attained age of 58 years & he served 40 years service throughout his career. His pensionable salary was 25k for last 7 years.
Pension = (Pensionable salary X Pensionable service) /70
(15000*35)/70 = Rs. 7,500/-
Mr. A will get monthly pension of Rs.7.5K throughout his life.
Pension for family in case of death of employee
Employee family will get pension if employee deceased in following cases;
i) Where employer has contributed at least one month of EPS contribution to employee account
ii) Where employee completed 10 years of service before attaining age of 58 years
iii) Where employee deceased after commencement of monthly pension
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