What is EPS? Eligibility, Calculation, Age | Employee Pension Scheme

What is EPS? Eligibility, Calculation, Age | Employee Pension Scheme

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:

  • The widow/widower of the deceased employee will receive a pension upon the employees’ death. After the former’s death, the child(ren) will receive a pension until they attain the age of 25 years
  • If the widow/widower re-marries, the children of the deceased employee will receive pension amount under the orphan category
  • In case the child(ren) is physically challenged, he/she will receive a pension for lifetime

What is the Eligibility Criteria to avail EPS pension?

Employees’ eligibility criteria to avail EPS pension are:

  • He/she must have an EPF account and be a member of EPFO
  • He/she must reach the retirement age of 58 (EPS can be claimed at the age of 50 but at a cost of a reduction in the amount of pension)
  • He/she must serve for a minimum period of 10 years in an organization
  • In any case, is an individual is unable to remain in service for 10 years before attaining the age of 58, he/she can withdraw the complete amount at the age of 58 by filling Form 10C and subsequently losing the chance of receiving the pension on monthly basis
  • He/she can defer the pension for two years (till 60 years of age) and get a pension at an additional rate of 4% for each year

EPS Calculation

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

date  12 Jul 2019

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