EPS is an acronym for the Employee Pension Scheme, 1995, that came into effect in the year 1995 replacing the Family Pension Scheme (FPS), 1971. Managed by the Employee Provident Fund Organization (EPFO) and supported by the Government of India, It is a pension and retirement scheme applicable to all the individuals (especially for workers earning less than or equal to ₹15K per month) working for an organization, which comes under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
An employee covered under the EPS scheme deposits a percentage of a portion (8.33%) from his/her monthly salary into their EPF account, from where they receive pension on monthly basis after retirement at the age of 58. In the case of the employee’s death, the pension amount goes to his/her widow/widower or child(ren) under the following conditions:
Employees’ eligibility criteria to avail EPS pension are:
Employee EPS contribution percent: 8.33% of total monthly salary.
Example: if the salary of an employee is ₹20,000/month, the amount that gets deducted and deposited monthly into the EPS account is:
₹20,000 X (8.33/100) = ₹1,666
EPS Pension per month after retirement
Pension per month = (Number of years of your service X Last drawn Basic salary)/70
Example: If an employee serves 15 years for ₹20,000/month and retires, then his monthly pension is:
(15*20,000)/70 = ₹4,286/month