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In India, Government have introduced several savings schemes such as NPS (National Pension Scheme), NSC (National Savings Certificate), PPF (Public Provident Fund), EPF (Employees’ Provident Fund), and EPS (Employees Pension Scheme) etc in order to cultivate savings habits in people.
This article is particularly focused on EPS (Employees Pension Scheme), its eligibility, contribution, calculations and its terms and conditions.
What is Employee Pension Scheme (EPS) 1995
Employees Pension Scheme (EPS) came into being in 1995 by replacing the FMS (Family Pension Scheme) and offering pension on disablement, widow pension, and pension for nominees.
In Employees Pension Scheme (EPS), only those employees are eligible to have an EPS account who is a member of an EPF account. Also, employers divert 8.33% from EPF account to an EPS account. Central Government also contributes 1.16% to an employees’ EPF account.
Also note that interest is not applicable in ones EPS account.
Employees can start receiving their pension from EPS only after the completion of 10 years of service. Employees who have attained 50 years of age are eligible for an early pension and 58 years of age for a regular pension.
Pension under EPS is for all one’s life, which employee himself will receive. And the spouse or children below the age of 25 years will be beneficiaries of the pension.
Availing the Pension
Under EPS, employees pension is divided into two categories:
- One is for those employees who have joined prior to 15th November 1995 and
- One for those employees who have joined post this date
Also, an employee becomes eligible for the scheme certificate is by the completion of 10 years of service and can claim the pension after attaining the age of 50 years and 58 years and can continue working but no fresh EPF contributions will be made.
EPS is considered to be a very convenient scheme as it allows withdrawal as long as they have not completed their 10 years of service. Also during the exit, the employee receives the employee and employer EPF contribution and the interest earned on it.
What is the Contribution for Employee Pension Scheme
Read the table below to know the contribution details from the employee and the employer towards EPF, EDLIS and EPS.
|Schemes||Employee Contribution||Employer Contribution|
|EPF (Employee Provident Fund)||12%||3.67%|
|EPS (Employees’ Pension Scheme)||NIL||8.33%|
|EDLIS (Employees’ Deposit Linked Insurance)||NIL||0.5%|
|EDLIS administrative charges||NIL||0.01%|
|EPF administration charges||NIL||1.1%|
How to claim the pension money under Employee Pension Scheme
In case if you have a scheme certificate of pension, you have to fill up Form 10 – D in order to get a regular pension. And if you have more than one scheme certificate, you can directly visit the EPF office and you will be required to attest your Form 10 – D by the bank manager.
In case you don’t have a scheme certificate of pension, which means you have not completed 9.5 years of service, you must claim a pension refund. In this case you are required to fill up Form 10 – C along with EPF withdrawal form and submit it through your employer.
Purpose of Employee Pension Scheme
The purpose of the scheme is to provide
- Superannuation Pension – This pension is for the subscribers who has completed 20 years of service and retires after attaining the age of 58 years.
- Retiring Pension – This pension is for the subscribers who have completed 20 years of service and retiring or ceases to be in employment before attaining the age of 58 years.
- Short Service Pension – This pension is for the subscribers who have rendered 10 or more than 10 years of service.
Terms and Conditions of Employee Pension Scheme
Read the below mention steps to know the terms and conditions of EPS:
- To have an EPS account, an employee cannot have more than one EPF account
- An employee falls from the eligibility criteria once they turns 50 years old
- An employee is required to complete minimum of 10 years of service in order to avail EPS scheme
- Government contribution towards EPS account cannot be more than 1.16% of Rs 174.ss
Required Forms in Employees Pension Scheme
Read below to know about the Forms which an employee is required to fill and submit in order to avail different benefits under EPS
- Forms 10 C – Form 10 C is required to be filled by a beneficiary or a member to avail withdrawal benefits and scheme certificate.
- Form 10 D – Form 10 D is required to be filled by a member to avail pension after 58 years of age, also to avail pension before 58 years of age but after turning 50. Also to get a disability pension.
- Form 10 D – Another Form 10 D is meant to avail nominee or dependent pension or to avail family pension and also to avail children and orphan pension.
- Life Certificate – Pension beneficiaries are required to submit it life certificate every November to the manager of pension disbursing banks.
- Non – Remarriage Certificate – Widows are required to submit non – remarriage certificate every year to the manager of pension disbursing banks.
Read below to know the list of Nationalised Banks in which provision has been made for the retired employees drawing pension under Employees’ Provident Fund Organisation (EPFO)
|S.No.||EPFO Regional Office||Pension Disbursing Banks|
|1||Delhi (North)||PNB, SBI, IB, UBI, HDFC, ICICI, AXIS|
|2||Delhi (South)||PNB, SBI, IB, UBI, HDFC, ICICI, AXIS|
|4||Gurgaon||PNB, SBI, HDFC, ICICI, AXIS|
|5||Faridabad||PNB, SBI, HDFC, ICICI, AXIS|
|6||Jaipur||PNB, Thar Gramin Bank, HDFC, ICICI, AXIS, SBBJ|
|7||Shimla||PNB, SBI, AXIS|
|8||Ludhiana||PNB, SBI, HDFC, AXIS|
|9||Chandigarh||PNB, SBI, HDFC, AXIS, ICICI|
|10||Bihar||PNB, BOI, HDFC|
|12||Kanpur||PNB, SBI, HDFC, ICICI, AXIS|
|13||Hyderabad||SBI, UBI, AB, HDFC, AXIS, ICICI|
|14||Guntur||SBI, AB, HDFC, AXIS, ICICI|
|15||Nizamabad||SBI, SY. BANK, Gramin BANK, UBI, AB, AXIS|
|16||Bhuvneshwer||SBI, BOI, UCO Bank, HDFC, AXIS, ICICI|
|17||Bangalore||SBI, CANARA, SY. BANK, CORP. BANK, VIJAYA BANK, HDFC, AXIS, ICICI|
|18||Goa||SBI, BOI, HDFC|
|19||Gulbarga||SBI, CANARA, SY. BANK, ICICI,CORP. BANK|
|20||Mangalore||SBI, CANARA, SY. BANK, CORP. BANK, VIJAYA BANK, AXIS|
|21||Peenya||SBI, CANARA BANK, SY. BANK, CORP. BANK, HDFC, AXIS, ICICI|
|22||Coimbatore||SBI, IB, IOB, HDFC, AXIS, ICICI|
|23||Kerala||PNB, SBI, IB, IOB, CANARA, SY. BANK, FED.BANK, HDFC, AXIS, ICICI, North Malabar Gramin Bank, SBT|
|24||Madurai||SBI, IB, IOB, HDFC, AXIS, ICICI|
|25||Tambram||SBI, IB, IOB, HDFC, AXIS, ICICI|
|26||Chennai||SBI, IB, IOB, HDFC, AXIS, ICICI|
|27||Ranchi||PNB, BOI, UBI, HDFC, AXIS, ICICI|
|28||Jalpaiguri||SBI, UBI, UCO, CBI, UBKG BANK|
|29||Kolkata||PNB, UBI, HDFC, AXIS,ICICI|
|30||Guwahati||SBI, HDFC, AXIS, ICICI|
|31||Raipur||PNB, SBI, HDFC, AXIS, ICICI, CBI,|
|32||Bandra||PNB, SBI, BOI, HDFC, AXIS, ICICI, BOM, IB|
|33||Thane||PNB, SBI, BOI, HDFC, AXIS, ICICI|
|34||Kandivali||PNB, SBI, BOI, HDFC, AXIS,ICICI|
|35||Pune||PNB, SBI, BOI, HDFC, AXIS, ICICI, BOM|
|36||Nagpur||PNB, SBI, BOI, HDFC, AXIS, ICICI|
|37||Ahmadabad||SBI, DENA, HDFC|
|38||Surat||SBI, DENA, HDFC, AXIS, ICICI|
|39||Vadodara||SBI, DENA, HDFC|
|40||Indore||PNB, SBI, HDFC, AXIS, ICICI|
Employees Provident Fund or commonly known as EPF is a retirement savings scheme which is managed and administered by the Central Board of Trustees. It is a collection of funds contributed by the employer and his employee on a month on month basis. EPF serves to a large number of people spread across the country. It is also considered to be one of the largest organisations and is acknowledged globally. The current Interest rate on EPF savings are 7.8% .
How to Calculate EPF Interest Rate
At present, the Government is clinging on to the rate of interest for General Provident Fund (GPF) and other related schemes at 7.8% for the October – December quarter. And the rate is in accordance with that for Public Provident Fund (PPF).
Contribution Structure of EPF
EPF has been categorized into two parts which are as follows:
- Contribution made by Employee
In this category, 12% of the basic salary of the employee will be deducted from employee’s salary.
- Contribution made by Employer
In this category, contribution made by the employer is also 12% which is the basic salary of the employee. In spite of that, this 12% is further subdivided into the following four parts which are as follows:
- Employee’s Provident Fund (EPF) – 3.67%
- Employee’s Pension Scheme (EPS) – 8.33%
- Employee’s Deposit Link Insurance Scheme (EDLIS) – 0.50%
- EPF Admin Charges – 1.10%
- EDLIS Admin Charges – 0.01%
Also, please note that in case the basic salary of the employee plus the Dearness Allowance (DA) is more than Rs. 15,000 then employer’s contribution towards employee’s EPF will have three options to choose from which are:
- Employees or company’s contribution of nearly Rs. 15,000 yearly can be restricted by the employer
- Employer may contribute towards EPF an amount equal to employee’s own contribution
- Employer may restrict your share in EPF as 12% of the salary while its own share to Rs. 15,000
Things to Ponder over at the time of Calculating EPF Interest
EPF contributions are shown by the employer with respect to the salary due. For example, salary for the month of August will be paid in September and the EPF contribution for August will be shown in September and not in August.
In case of death of the employee, the interest is payable till the month preceding the month in which death occurred.
Now let us look at some of the new Amendments made to EPF and EPS Schemes.
According to the new amendment, an EPF holder can nominate a family member as a beneficiary / nominee. The beneficiary or nominee would receive Rs. 3 lakh as insurance coverage, in case of sudden demise of the member. Earlier, the value was only Rs. 1.56 lakh.
Earlier, the minimum contribution was set at 12% of Rs. 6,500. However, it has been revised to 12% of Rs. 15,000 per month. Hence, the employees are now expected to contribute Rs. 550 per month and Rs. 1,250 per month towards EPF and EPS, respectively.