EPS ( Employee pension scheme) accounts to be a major part of the EPF contributions. It forms to be 8.33% of the basic pay. Moreover, this contribution is a part of the Employer’s 12% contribution. So in totality, 8.33% of the 24% of the total contribution(employee + employer)goes to EPS. A contribution of 8.33% of the basic pay or 1250 Rs, whichever is higher, is made to the EPS scheme. So, with years of service, you can have a substantial amount of pension for your retirement. In this article, we would discuss when is an employee eligible to enjoy a pension scheme?
Guidelines Related To EPS Withdrawal Eligibility
Before getting into the topic straight in; let’s discuss the eligibility criteria for the EPS scheme:
i. First of all, the employee must be a member of EPFO. Moreover, having an active EPFO account online would help in the longer run.
ii. Secondly, it has been made mandatory that employees should complete at least 10 years of service.
iii. The employee should have completed his/her service before he/she reaches the age of 58 years. It is important to note that the higher the years of service higher will be the pension received.
iv. The employees must earn less than 15000 to enroll in the EPS scheme. Also, employees earning more than 15000 can enroll voluntarily for the same.
v. Also, you can withdraw your EPS scheme benefits earlier than 58 years. That is, you can get your EPS granted as early as you reach 50 years. But note that you would have to give up some interest in the scheme. That is, you will get to withdraw from the scheme but at a reduced rate of interest.
vi. Moreover, if you decide to work beyond the age of 58, you get extra benefits. You can defer taking the EPS scheme until the age of 60 years. This would be 2 years of extra service. With this increase, you can get an additional 4% increased interest every year.
When Can An Employee Enjoy The Benefits?
The main objective of the EPS scheme is to provide monthly pension to its members. This money would look into the employee’s necessities and the spouse once the employee is retired. So, a person can enjoy the fruits of EPS when you reach the age of 58 years.
Furthermore, you also have an option to opt for an early pension. But it is applicable only when an employee has rendered more than 10 years of service and is not currently employed. However, you would get reduced by 4% every year if taken in advance before 58 years.
Moreover, on the demise of the employee, the family receives monthly family income. Here the family includes the spouse and the two children of the employee below 26 years only.
How Your EPS Pension Is Calculated?
The monthly pension that you receive depends upon the pensionable salary and pensionable service. The EPS member’s salary is calculated based on a formula.
Member’s monthly salary= ( Pensionable salary+ Pensionable service) / 70
So lets us look into these parameters:
- Pensionable salary implies the average monthly salary that the employee has earned in the last 12 months before exciting the EPS services. If the person was not employed in that period, then those months are left out.
- Pensionable Service: This implies the actual years of service put in by the employee. So, for this, it becomes crucial for the employee to get the EPS Scheme Certificate issued. And the same has to be submitted to the new employer whenever you join a new organization. It would also worth knowing that you can have a bonus based on years of service. The employee is subjected to a bonus of 2 years after completing 20 years of service.
EPS provides a good deal of money for your retirement needs. Since this is specific to the sustainability of the employee’s family whose age is above 58 years, this pension scheme can range from 8000 Rs per month to 15000 Rs ( Max ). It stands to the epitome that hard work throughout your career can never go in vain.