EPF forms the major investment scheme for salaried employees. The employees have trusted them for ages. They provide a handsome amount of retirement funds that can be used to fulfill goals, and dreams.EPS contributions make you make an EPF account. If you don’t know this, then you are in the right place. In this article would find a detailed discussion on EPS. And the answer to all your queries related to it is present in this article. So, What is the contribution percentage to the Provident fund and Pension Scheme?
What Is EPS?
EPS or Employee Pension Scheme is a part of your EPF contribution. They are also known as EPF Pension. It is a social security scheme where an employee working in an organized sector is eligible for the pension. But, it is only for employees at their retirement age. According to the EPFO guidelines, the retirement age has been set to 58 years.
But note that the EPS scheme’s benefits can only be availed if the employee fulfills certain requirements. The employee has to serve at least 10 years of service and make contributions to the EPF too. However, the contributions made doesn’t have to be continuous. But these contributions should have been made before the retirement age.
Contribution Percentage To The Provident Fund And Pension Scheme
The employee and employer contributions to your PF account. The employee contribution might vary from 10% and 12%(most probable) to a max of 20%. But Generally, it remains to be 12%. Also, a part of the contribution comes in from the employer that accounts for 12 % of the employee’s basic pay. But not of the employee contribution goes to the EPF account.
A part of 12% that is 8.33% from the employer’s contribution, is alleged to EPS scheme. And 3.67% of the employer’s contribution goes directly to EPF. Therefore, 8.33% of the employer’s basic pay is the contribution to EPS every month. But this contribution has a cap on it. If your basic pay is below 15000 Rs, then 8.33% of the basic you earn is credited to EPS. The employer makes this part of the contribution. But if you earn above 15000 Rs, then 8.33% of 15000 is added to EPS.
This amount would be 1249.5 Rs is given to the EPS. The rest of the amount above it is given to EPF directly. The employer contribution stands to be 12 %. A total contribution to EPS stands to be 8.33% to a max of Rs1250 (round-off). And the provident fund contribution to a total of 15.67% plus the additional amount of EPS.
Your basic salary is Rs20000. Then 8.33% of this would be Rs 1666. But according to the EPS limit guideline, a max of 1249.5 Rs can only be credited to EPS. So after the EPS cut, the value remains to be 416.5 Rs. This amount is then credited to EPF directly.
Also, 3.67% that the employee contributes accounts to 734 Rs. And 12% of the employee contribution that is 2400 Rs is also contributed to EPF.
Therefore, an EPF account contribution is 3551 Rs, and the EPS contribution is 1250. Therefore, with a total of in hand, the basic salary of the employee becomes 17600Rs.
The employee has to fulfill certain criteria to be eligible to claim the benefits of the scheme. This is as follows:
- The first and foremost requirement stands that the employee must be a member of EPFO.
- At least 10 years of service with EPF contributions must be made before retirement.
- Before claiming the opportunities of the scheme, the employee should have reached the age of 58 years.
- Some norms allow EPS at the age of 50, but you need to give up some interest benefits.
- The employee can choose to extend the commencement of his/her pension scheme. This can be done for a period not extending more than two years (up to 60 years of age). Under such a situation, he/she will get a pension at an increased rate. This increased rate of interest may reach 4% each year.
EPS contribution is a part of your overall EPF account.EPS stands to be the major pension system for various old age people in India. Moreover, they have also provided support for families Who have suffered family losses. An orphan or a window gets a substantial pension to fulfill their needs.