All You Need To Know About Employees’ Pension Scheme

November 28, 2022

482 Views

Wasn’t there a time when people thought government jobs were the most secure because they had the choice of getting a pension even after their retirement? Why is that still not the case? That is because we have so many pension schemes out there that we can actually count on. Even if you are a salaried person, you would have to know that there are so many pension schemes out there that can do you good in the long run.

Moreover, all it would ever take is a small compensation each month when you get your salary. So, while you can stay in the private sector, you can still enjoy the benefit of a pension. One such scheme that you can count on is the Employee pension scheme.

What is the Employee’s Pension Scheme?

The EPF pension program was established by the government in 1995 and is also known as the Employees Pension Scheme 1995. It includes both new and returning EPF members. If a member wishes to withdraw pension money from the EPS pension scheme, specific procedures must be followed.

EPS – In Depth

The EPS is a social security plan run by the Employees Provident Fund Organization (EPFO). This system is for the pension of employees in the organized sector who retire at the age of 58.

This scheme’s advantages or benefits are only available if the employee has served for 10 years. Since 1995, EPS pensions have been offered to both existing and newly hired EPF employees.

Do you want to give this scheme a try? But, before you do – you might want to just know who can really start this and what the bar is set up for the scheme.

Who Can Save through the Employee’s Pension Scheme?

The following are the eligibility requirements for receiving EPS benefits:

You must be an EPFO member.
You must be 50 years old for an early pension and 58 years old for a regular pension.
If you postpone your pension for two years (until you reach the age of 60), you will be able to receive an additional 4% every year.
You must have served for at least ten years.

Everything You Need to Know About the Employee’s Pension Scheme

As EPS is sponsored by the Indian government, the earnings are assured, and investing in the scheme is risk-free. The amount that will be refunded will be set and will not be changed.
If the widower/widow remarries, the children are considered orphans and receive the increased pension amount.
This is a benefit along with the EPF interest
Employees participating in the EPF plan will also be enrolled in the EPS scheme.
The individual will receive a minimum monthly pension of Rs.1,000.
If the widow/widower is receiving the EPS amount, she or he will continue to receive it until his or her death. Following that, the children will get the pension amount until they reach the age of 25.
If the child is physically challenged, the pension amount will be paid until his or her death.
Employees who receive a base salary plus DA of Rs.15,000 or less must enroll in the scheme.
When you reach the age of 50, you will be entitled to withdraw your EPS.

What are the Perks of EPS?

Eligible EPS pension participants can receive pension benefits based on the age at which they begin taking withdrawals. The value of the pension varies depending on the circumstances.

The member is entitled to pension benefits after retirement, that is, beyond the age of 58. However, in order to get pension benefits, individuals must have made an active pension contribution to EPF for at least ten years before retirement. The EPS pension scheme certificate is generated after retirement. This certificate is necessary to complete Form 10D in order to withdraw the pension on a monthly basis.
If a member leaves the military or is unable to serve for a period of ten years before reaching the age of fifty-eight, he or she may withdraw the entire amount by completing Form 10C.
If an EPFO member becomes completely and permanently incapacitated, he or she is eligible to receive monthly pensions regardless of whether or not they have performed the minimum service period required to obtain monthly pensions. For them to be eligible for this pension, their employer needs to deposit EPF minimum pension funds into their Employee Provident Fund account for a minimum of one month.
A member can receive monthly pension payments beginning on the date of disability and continuing for the rest of his or her life. However, the member must undergo a medical examination to ensure that they are not fit for the work that they were doing prior to becoming incapacitated.
In the following circumstances, a member’s family becomes eligible for pension benefits:

If the member dies while on duty and his employer has put monies in his EPS account for at least one month.
If the member has served for ten years and dies before reaching the age of 58.
In the event of the member’s death after the start of the monthly pension.

What Happens if the Employee Switches Jobs?

When a person changes occupations, the EPF amount can be transferred to the new Member ID, but the pension amount cannot and must remain in the old Member ID. The transfer of service details can be used to determine how long a person has worked.

As a result, if a person works a third job, the EPF account can be consolidated into a single account, but the EPS amount is represented in their separate passbooks.

Individuals are entitled to a pension after completing ten years of service. Individuals must, however, be 50 or 58 years old to withdraw the pension sum. Individuals who withdraw their pension before reaching the age of 50 will receive a lower EPS amount. Individuals who have not completed ten years of service but have been out of work for two months or more will be able to withdraw the EPS amount.

If an employee leaves an EPFO-covered company to work for a non-EPFO-covered company, the EPFO must provide a Scheme Certificate. You can submit this certificate if you join an EPFO-covered company in the future. If the individual does not join a company until the age of 50 or 58, the certificate can be given to the appropriate EPF field office.

Individuals who have worked for many employers and have fewer than ten years of experience can also obtain certifications. Individuals joining another EPFO-covered company, on the other hand, will not be required to obtain the certificate.

The Bottom Line

Pension comes off as a source of reliability in times of dependence. This is exactly why you need to choose smarter ways to spend your retirement in peace, and one such method is the employee pension scheme.