EPS is the pension scheme provided under the EPF contributions. It a monthly pension scheme for a retired employee. An employee is considered to be retired when he/she turns 58 years. It can help in a great way to meet the substantial needs of the employee and the spouse. But one major requirement to avail of this service is to provide 10 years of continuous service. Often this norm is misinterpreted by the employees. So in this article, we will discuss: What does it mean by continuous service of ten years for EPS?
What Does Continuous Service Of 10 Years Imply And It’s Impact
The continuous services of 10 years, simply that the employee should have done 10 years of service before retirement. As soon as the employee reaches 58 years, he/she is considered to be retired. In other words, let us assume you start contributing to your EPF account at the age of 23 years. So, there would be at least 36 years before you turn your retirement age. Therefore, to comply with the norm of 10 years of continuous service, you would have 36 years to do so. So this means you have to do 10 years of service before reaching your retirement age.
To make things more clear, let us look at another instance. You are around in the young twenties. Assume you worked for company A for 4 years. Here you were enrolled in the EPF scheme. Then you switched to another organization and worked for 3 years. Here you didn’t contribute to EPF as the employer didn’t offer EPF benefits. You then switched your job to Company C. This company offered EPF, and you are continuously working under it for 7 years. Then you would complete 10 years of service contribution to EPF. Hence, you would be eligible for the EPS scheme.
So soon as you fulfill this requirement, you will receive a Scheme Certificate in your name. This will certify that you ha e completed 10 years of service. This stands as a virtue for your eligibility for the pension scheme. The withdrawal can be made in lump or on a monthly pensionable basis. But remember, this income would be taxable. So it is advisable not to opt for pension lump sum money when the amount is taxable. In such a scenario, opt fora monthly pension instead.
Now let’s look at the impact of the years of service. The higher the number of service years higher will be the monthly pension/lump- sum money. The monthly salary is calculated as:
Member’s monthly salary= ( Pensionable salary+ Pensionable service) / 70
Moreover, you can also think it is as more the contribution more will be the benefit. And the contribution can be made higher by increasing the service years.
The cap on EPS contribution is 8.33% of the basic or 1250 Rs, whichever is higher. There is a limit to the pension that you can receive. Suppose you work and contribute continuously until you turn 58 years. Then you might get eligible for a monthly pension of 15000 Rs, which is the maximum that an employee can receive. But his scheme is best from all the other pensionable schemes offered by various institutions.
EPS has been very well known for its reliability In terms of pension and amount for years. Many private organizations offer services similar to this, but no one can match EPS’ return. Moreover, the security that EPS is unmatchable. So, always try to contribute to the EPS for the required period of 10 years.