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All you want to know about Employee Pennsion Scheme

All you wanted to know about Employee Pension Scheme (EPS)

by Holistic 1 Comment | Filed Under: Investments

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EPS is a pension scheme made for the organized sector. All EPS members who have completed 9 years and 6 months of their service and have completed 58 years of service will get a pension through EPS Scheme.

An employee, who is a member of EPF, will automatically become a member of EPS. An Employer shares 12% of “Basic Pay + DA” to the employee EPF account, which is divided as below:

A large part of the employer’s share goes towards EPS. An employee’s EPF Account broadly consists of 3 parts:

  • Employee pension scheme (EPS)
  • Employee Provident Fund (EPF)
  • Employee Deposit Linked Insurance (EDLI)

In this article, we will discuss the Employee Pension Scheme (EPS) in greater detail.

Table of Content:

    1. Key features of the EPS Scheme
    2. How to become a member of an EPS Scheme?
    3. Types of pension available through EPS
    4. How to calculate the amount of premature EPS Withdrawal?
    5. What is EPS Scheme Certificate
    6. How much pension can be received under the EPS Scheme?
    7. EPS Online services through UMANG App.

Key features of EPS-Scheme

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Pension is provided in case of retirement or disablement of the member or once he attains 58 years of age.

All employees who are the members of EPF will automatically become members of EPS. An employee after joining an organization has an option to opt for EPF if the “Basic Pay+DA” of an employee is greater than Rs.15,000. But, if it is less than Rs.15,000, then it is compulsory to opt for EPF. And, Pension is received by the pensioner for a lifetime.

In case of the death of a pensioner, the pension will go to their spouse or children or nominee. As per EPS rules, spouse and 2 children will get the pension after the death of an EPS member.

  • 2 children must be below 25 years of age. They will receive 25% of the widow pension until they are 25 years old.
  • A disabled child will get 75% of the widow pension share until his/her lifetime.

Unlike other pension schemes such as NPS, where a family gets the accumulated pension corpus. In EPS, the family gets the pension and not the accumulated corpus after the death of an employee.

For the purpose of pension calculation, if the service duration is equal to or more than 6 months, it will be rounded off to 1 year. For example, if you worked for 12 years and 6 months, then your service will be counted as 13 years. However, if you worked for 12 years and 5 months, then the service will be counted only for 12 years.

Contributions of EPS are given as:

  • 8.33% of the Employer contribution goes to the EPS account each month.
  • The government also contributes to the EPS account by 1.16%.

That is, the government will contribute Rs.180 and an employer will contribute Rs.1250 as the maximum limit towards the EPS scheme of the employee.

Both of the above contributions are limited to a maximum of Rs.15,000 in Basic+DA.

The minimum pension under the EPS Scheme is Rs.1000/- and the maximum pension Rs. 7500/- per month. And the maximum tenure of pension calculation is 35 years.

Unlike EPF, the EPS contributions do not earn any interest.

You are eligible to receive more than one pension through EPS.

How to become a Member in an EPS Scheme?

  • All employees who have EPF Account will automatically become a member of EPS Scheme, as mentioned earlier.
  • Upon EPS membership, an employee will remain a member till the age of 58 years. Thereafter, an employee will become a pensioner and receives EPS pension and will no longer remain an EPS member.
  • Once, the EPF/EPS membership is begun, it cannot be opted-out.
  • The pension can be deferred until 60 years of age. For each deferred year, pension increases by 4%.
  • There is no EPS membership to the employees joining after 1st September 2014, if the Basic Pay + DA is more than Rs.15,000.

Types of Pensions available through EPS

1. Superannuation:

This pension is given to those who have completed 58 years of service or must have completed at least 10 years of service. Pension will be provided after 58 years, whether you are in the service or not.

2. Early pension:

Between the age of 50 and before 58 years, if an employee is willing to retire voluntarily, in such case, an early pension can be taken but pension will reduce by 4% of each early retirement year. Also, an employee should have been in service for at least 10 years. And, while receiving early pension employee must not be in service of any sort.

3. Pension to Family Members:

  • Pension is given to the family members in case of death of the EPS member, provided that an EPS member should have completed at least 1 month of employment. Pension allotment details among family members of the deceased are already explained in the previous section.
  • The family member will also receive the pension in case of the death of EPS Pensioner. If the pensioner doesn’t have a family, the pension is given to the nominee and in case, a nominee is not mentioned then the pension is given to one of the parents of the pensioner.

How to calculate the amount of premature EPS Withdrawal?

The table shown below is used for the calculation of the withdrawal amount from EPS. It has the number of years of service along with the corresponding factor. This factor is multiplied by “Basic Pay+DA” and the resultant amount you will get on withdrawal.

Years of Service Proportion of Wages
1 1.02
2 1.99
3 2.98
4 3.99
5 5.02
6 6.07
7 7.13
8 8.22
9 9.33


For example, if a person wants to retire after completing 8 years of service and has the “Basic Pay + DA” equals to Rs. 22,000. But, as already mentioned the maximum amount of “Basic Pay+DA” is capped at Rs.15,000 by EPFO.

Therefore, the receivable amount will be:

15,000*8.22 = Rs. 1,23,300/-

Hence, a person who has completed 8 years of service, will receive his EPF Contribution of Rs.1,23,300.

You cannot withdraw your EPS Benefits, under the conditions given below:

  • If you have not completed your employment for more than 180 days.
  • If you have completed 10 years of service, but you are below 50 years of age.

In the above 2 cases, EPS Scheme Certificate is given to the EPS member, it is described in the next section.

What is EPS Scheme Certificate?

EPS Certificate is a certificate issued by the EPFO. If you have worked in an organization for more than 10 years and you want to withdraw from EPS you will not get your money but would get an EPS Scheme certificate, which you can use at age of 60 years to EPFO to get your pension.

This certificate consists of the basic details and the details of the service of an EPF member, as shown below in a snapshot taken from a sample EPS Certificate:

EPS Scheme Certificate also shows the family details of an employee and the nominee, who is eligible to claim a pension in case of death of the member.

So, who can get an EPS certificate?

Every employee who has an EPF account and is registered under EPFO can get EPS certificate for claiming his/her pension. The EPS balance can be either withdrawn after retirement or it can be claimed as pension by opting EPS certificate depending on the tenure of service and the age of the member, with some of the condition given below:

  • If you have completed less than 10 years of service and your age is less than 58 years, then you are eligible either to apply for EPS Scheme Certificate or to withdraw the EPS.
  • If you have completed 10 years of service or more and your age is less than 58 years, then you are not allowed to withdraw money from EPS account. But you can apply for the EPS Scheme Certificate, by filling up the Form 10C.
  • If you have completed 10+ years of service and your age is more than 58, then you should apply for pension by filling up the Form 10D.
  • In case you are joining a new company, then you are supposed to submit your scheme certificate to your new employer. In this process, your past service will get added to the new service and your pension amount will be cumulated.

How much pension can be received under the EPS Scheme?

How much pension can recieve from EPS Scheme

Pension amount can be calculated using the formula given below:

(Average Salary * Pensionable Service)/70

Where the average salary (BASIC+DA) is the salary drawn in the last 12 months.

And, the pensionable service is the number of years of service after 15/11/1995.

Average salary is capped at Rs.15,000 and the pensionable service is capped at 35 years.

Therefore, if we calculate the pension amount based on these numbers, we will get:

(15,000*35)/70 = Rs.7,500/- per month

Hence, Rs.7,500 is the maximum amount of pension you can get per month, irrespective of your years of service.

In a similar way, a pension is calculated for any amount of average salary and any amount of pensionable service.

EPS Online Services through UMANG App

You can download UMANG App and click on EPFO icon. You will find a screen as shown below:

Now, you can click “pensioner services”, where you will find 2 options, given in the image below:

You need to provide your EPFO Office details and your date of birth to view your passbook.

And, in order to update your “Jeevan Pramaan” (Life certificate), you need to provide your Aadhar details and registered mobile number. It will be verified through an OTP.

Also, you can submit Form-C details available under “Employee Centric Service”, in order to avail the benefits of EPS Scheme Certificate, as described in the previous section.

Hope you have found this information on EPS valuable. If you have further queries on EPS, feel free to post them in the comment below.

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Comments

  1. Subramaniam Swaminathan says

    August 28, 2019 at 12:06 pm

    Very well summarised and extremely relevant. thanks

    Reply

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I have been using Holistic Investment Planners for the last three years. Mr. Srinivasavaradhan answered all my questions and doubts very patiently during the first free consultation. I was able to clearly define my short-, medium- and long-term goals once I signed up for the comprehensive plan and got their investment plan suggestion to achieve my goals. They are very polite and highly professional whenever I contact them for any queries or make investments. They never pressurize you to invest on their recommended financial products. I would have been lost money by investing directly without their help since I do not have time and knowledge about different financial products. Risk planning is also done as part of financial planning. Truly, they are holistic planners when it comes to your financial planning. They help you to define your life goals, understand your financial resources and establish a plan to invest towards reaching those goals. They do review your plan as you progress to make sure that you are on correct path to achieve those goals. Kudos to the team and keep up the good work!!! I am happy that I found holistic investment planners for my financial planning and management.
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aksaswadkar
24. September, 2021.
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Financial planning brings peace in life. Holistic Investment have supported in arriving financial plan based on future goals. My investments are regular since then. They are professionals in their business, will recommend others.
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I have been using Holistic Investment Planners from last one year. The journey has been fantastic. Being a finance person myself I always thought we can look after and plan own finances also. However, due to lack of time and deciplain the things are not always as desired. After joining with Holistic Investment for the first time Icame to know the Financial goals and quantified them. Some dreams were unrealistic based on the earnings and savings so had a reality check. Also got the information and deciplain of investing on regular and more rewarding securities. I definetly suggest to use Holistic Investment Planners. They are professionals, available and hear youor full story before presenting plans. They are flexile in the sense if there are some urgent deviations required, they help to plan the same. For all professionals/individuals I would suggest using professional help of Holistic Investment Planners for best results in long term investment and financial goals achivements. Last advise will be to start early in your life. It really pays well to start in the beginning itself else the dreams needs to adjust :)
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Joseph Mathias
Joseph Mathias
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Srinvas Kannan
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I came across Holistic investment planners almost 5-6 years back, but I did not have the trust since I had met a few of them who did not sound promising. Then I started investing through a financial advisor of my friend. After 4 years of investing the returns were very low. I was disappointed and started looking for financial advisors when I came across Holistic investment. I had a detailed discussion about my goals and the way they would approach achieving my goal before deciding to switch my investments to them. After a thorough analysis of my then existing portfolios, they suggested new ones and we zeroed-in on 6 schemes/funds where our investment would be split. I am glad I made the decision of switching over and taking Holistic planner's advise, my returns are handsome and I only wish I could have taken their help/advise 5 years back itself. Neverthless, I would like to recommend their services for investment and financial advise if someone is serious about their investments.
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Shivaram Andiappan Selvaraj
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Nellai B
Nellai B
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Google rating score: 4.4 of 5,
based on 61 reviews

Google Reviews

Jey S
Jey S
24. September, 2021.
I have been using Holistic Investment Planners for the last three years. Mr. Srinivasavaradhan answered all my questions and doubts very patiently during the first free consultation. I was able to clearly define my short-, medium- and long-term goals once I signed up for the comprehensive plan and got their investment plan suggestion to achieve my goals. They are very polite and highly professional whenever I contact them for any queries or make investments. They never pressurize you to invest on their recommended financial products. I would have been lost money by investing directly without their help since I do not have time and knowledge about different financial products. Risk planning is also done as part of financial planning. Truly, they are holistic planners when it comes to your financial planning. They help you to define your life goals, understand your financial resources and establish a plan to invest towards reaching those goals. They do review your plan as you progress to make sure that you are on correct path to achieve those goals. Kudos to the team and keep up the good work!!! I am happy that I found holistic investment planners for my financial planning and management.
aksaswadkar
aksaswadkar
24. September, 2021.
I was about to retire and really not understanding how to invest money to have financial freedom and fulfilling my goals. Was desperately searching on internet way out and fortunately came across Holistic Investment Planners. I read number of articles on their website and realized that this is the agency which I want and engaged their services for my retirement planning. It is an excellent experience to be associated with Holistic. Right from day one our interaction was fantastic and they gave me such a wonderful plan that I had never imagined. I am fortunate enough to be in the client list of Holistic. I have recommended Holistic to my friends as well.
Lionel Faber
Lionel Faber
16. September, 2021.
I've been availing their services for the past year. They are highly knowledgeable in the field and are very patient with all doubts and queries. Personalized financial planning is provided keeping your short term, medium term and long term goals in mind. They do not pressurize you to purchase schemes of their choice. They provide their input and suggestions and leave the decision up to you which shows their honesty and high principle.
Sridhar
Sridhar
8. September, 2021.
Financial planning brings peace in life. Holistic Investment have supported in arriving financial plan based on future goals. My investments are regular since then. They are professionals in their business, will recommend others.
Nitesh Agrawal
Nitesh Agrawal
6. September, 2021.
I have been using Holistic Investment Planners from last one year. The journey has been fantastic. Being a finance person myself I always thought we can look after and plan own finances also. However, due to lack of time and deciplain the things are not always as desired. After joining with Holistic Investment for the first time Icame to know the Financial goals and quantified them. Some dreams were unrealistic based on the earnings and savings so had a reality check. Also got the information and deciplain of investing on regular and more rewarding securities. I definetly suggest to use Holistic Investment Planners. They are professionals, available and hear youor full story before presenting plans. They are flexile in the sense if there are some urgent deviations required, they help to plan the same. For all professionals/individuals I would suggest using professional help of Holistic Investment Planners for best results in long term investment and financial goals achivements. Last advise will be to start early in your life. It really pays well to start in the beginning itself else the dreams needs to adjust :)
Swetha Vasanth
Swetha Vasanth
6. September, 2021.
This is my first year service with the Holistic Team and I would say that they are very much helpful in creating a financial plan and follow ups during the year. I would definitely suggest them if anyone who is willing to proceed with their savings professionally.
Joseph Mathias
Joseph Mathias
6. September, 2021.
I came to know about Holistic Investment Planners online while searching for different investment ideas. Once I contacted them the journey was very smooth. Mr. Ramalingam explained all the aspects of Financial planning in detail and it opened my mind. I realized how important it is to have a Financial planning. Mr. Rajan suggested all the requirements as per my goals and made a Investment plan keeping in mind of my goals. I started my Investment journey with them. I wish I had done it some years back then it would have been in a different level. Review meetings were held every six month to check the implementation of the plan and check the results as per the requirements and to check if any changes required. Overall it was a good experience with Holistic Investment team and would like to continue in the years to come.
Srinvas Kannan
Srinvas Kannan
30. July, 2021.
I came across Holistic investment planners almost 5-6 years back, but I did not have the trust since I had met a few of them who did not sound promising. Then I started investing through a financial advisor of my friend. After 4 years of investing the returns were very low. I was disappointed and started looking for financial advisors when I came across Holistic investment. I had a detailed discussion about my goals and the way they would approach achieving my goal before deciding to switch my investments to them. After a thorough analysis of my then existing portfolios, they suggested new ones and we zeroed-in on 6 schemes/funds where our investment would be split. I am glad I made the decision of switching over and taking Holistic planner's advise, my returns are handsome and I only wish I could have taken their help/advise 5 years back itself. Neverthless, I would like to recommend their services for investment and financial advise if someone is serious about their investments.
Shivaram Andiappan Selvaraj
Shivaram Andiappan Selvaraj
3. July, 2021.
I got a free first time consultation. I got my doubts resolved. They also gave additional advises for investment planning which was also useful.
Nellai B
Nellai B
26. June, 2021.
I have been associated with them for the past three years. They are very professional and polite in answering all our questions. I have complete trust in their suggestions. I strongly recommend for anyone. I am looking forward to have strong and successful association with them.
Google rating score: 4.4 of 5,
based on 61 reviews

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