Employee Pension Scheme - Eligibility, Benefits & Application Process

Let’s face it: when was the last time you gave your retirement serious thought? We are all geared up in the race to build careers, chasing goals, and experiencing life to the fullest, but we miss out on the most essential thing: Preparing for the future. This is where the Employee Pension Scheme (EPS) comes into play. It is one of India’s major social security schemes, which has been established to ensure income even when the hustle stops.

If you were wondering, “What is EPS? or how to find the best retirement plan, EPS in PF?” grab a cup of coffee and we together break it down together.

What is the Employee Pension Scheme (EPS)?

The EPS full form is Employee Pension Scheme. This scheme was started in the year 1995 by the Government of India and is currently managed by the Employees’ Provident Fund Organisation (EPFO). The EPS scheme is a social welfare scheme that assures a recordable monthly pension for employees under the organised sector post-retirement.

Think of it as your retirement savings plan in action. While your monthly salary handles your present, the EPS scheme takes care of your future.

What’s cool? If you’re already part of the Employees’ Provident Fund (EPF), you’re also automatically enrolled in the EPS Provident Fund. No extra forms or approvals.

Key Features of the EPS Scheme

The significant features of the EPS scheme include the following:

1. Guaranteed Monthly Pension:

   One of the biggest advantages of the Employee Pension Scheme (EPS) is the assurance of a fixed monthly pension for life. Once you reach the age of 58 and have completed a minimum of 10 years of eligible service, you are entitled to receive a pension every month. This creates a dependable income stream during retirement, especially for private-sector employees who may not have access to government pensions. The Employees' EPS in PF is structured in a manner to provide financial security to employees after their earning phase ceases.

2. Automatic Enrollment for EPF Members

   There’s no separate sign-up process for EPS. If you are already a member of the Employees’ Provident Fund (EPF), you are automatically enrolled on the EPS scheme as well. The link between the EPF and the EPS ensures that every qualified employee in the private sector is catered for without the need to submit an application separately.

3. Shared Contributions Towards Your Retirement

   Following the EPF structure, you and your employer each pay 12% of the basic salary, along with dearness allowance. What is notable is that your employer’s contribution also includes 8.33%, which goes directly to the EPS in PF and builds your pension corpus over time. The remaining portion of the employer's contribution, which is 3.67 per cent, along with the employee's entire 12 per cent, is placed in the EPF account. This model of shared contributions works best as it ensures that the pension fund increases steadily over the period of employment.

4. Lifelong Security for You and Your Family

   The EPS 95 pension scheme is designed not just as a retirement plan, but also as protection for dependents in case of unanticipated events. Dependents of the member, such as widows, children, and orphans, are entitled to receive pensions, therefore ensuring their financial support after the untimely death of the member. Besides disability pension, widow pension, and orphan pension are also covered under the scheme making it a complete family security plan.

Who is Eligible for the EPS Pension?

Let’s break it down. To qualify for the monthly pension benefits under EPS, here’s what you need:

Important: If you delay drawing your pension from 58 to 60, you get an extra 4% annually. Smart move for better retirement planning.

Contributions Towards the EPS Pension

Let’s demystify where your money goes:

That 8.33% from your employer is the heart of your EPS provident fund.

EPS Withdrawal Rules – Can You Take Your Money Out Early?

Here’s the thing: EPS pension 2,900 or any amount isn’t easily withdrawable. It depends on your employment status and service duration.

While Still Employed

You cannot withdraw your eps scheme contributions.

If Unemployed

• Less than 10 years of service: You can withdraw your EPS balance after 2 months of unemployment.
• More than 10 years of service: You can’t withdraw the amount. You must wait for retirement to claim a pension.

Other Scenarios

• At 58 Years: A full pension begins.
• Retirement anytime after age 50 is possible, provided a reduced pension and no lump sum is paid out.
• Disability: Receives full pension even if the service period is less than 10 years.
• Death of a member: In this case, a family pension will be paid to the nominee.

How to Calculate Your EPS Pension?

We don’t want to lead you into a painstaking computation. Here’s a straightforward formula:

EPS Pension = (Pensionable Salary × Pensionable Service × Pension Factor) / 70

This is what it refers to:

• Pensionable Salary: It refers to the mean of the last 60 months’ salary (generally, the EPS Pension’s contribution is limited to ₹15,000).
• Pensionable Service: Total years (6+ months round to next year).
• Pension Factor: Usually 1.

Example:

Let’s say you earned ₹15,000/month and worked for 25 years. Your EPS Pension = (15,000 × 25 × 1)/70 = ₹5357/month approx.

You can also use the PNB MetLife retirement planning calculator to get instant results without crunching numbers.

Types of Pensions Under the EPS Pension Scheme

While trying to assess the equation of retirement and work benefits, one might think that it is all about after work. In fact, the EPS 95 pension scheme has a lot more to offer. It is not just a retirement plan. It is fundamentally an aid scheme for you and your family, combined with your EPS in PF contributions. Thus, the aim is to understand how many types of funds you or your family would be eligible for under the employee’s pension scheme.

1. Superannuation Pension

   This is the standard form of pension available under the EPS scheme. If you retire after age 58 and have completed at least 10 years of eligible service, you qualify for the superannuation pension. This full monthly pension ensures a steady income in your post-retirement years. According to EPF pension rules for private employees, your pensionable salary (averaged over the last 60 months) and total years of service are used to calculate the payout, often amounting to ₹2900 or more, depending on your contributions and tenure.

2. Early Pension

   Not everyone retires at 58. Some may wish to leave the workforce earlier for personal or health reasons. The EPS pension allows for this through the early pension option. If you’ve completed 10 years of service and are between 50 and 58 years old, you can opt for a pension before the official retirement age. However, it comes at a cost, a reduction of 4% for each year the pension starts before 58. While the amount may be lower than the standard EPS pension 2900, it still provides crucial financial support when needed.

3. Disability Pension

   Accidents or health conditions can sometimes change life’s course unexpectedly. The EPS 95 pension scheme covers such situations with its disability pension. If you become permanently and completely disabled during your employment, regardless of how many years you've worked, you are eligible for a lifelong monthly pension. This is a vital feature of the EPS scheme, ensuring that a permanent disability doesn’t cut off your income. It offers peace of mind, knowing your financial well-being is protected even during difficult times.

4. Widow Pension

   Under the EPS provident fund, your family is protected in the event of your untimely death. If you are an EPS member and pass away while in service or after retirement, your spouse will receive the widow's pension. This benefit is paid until the spouse either remarries or passes away. The amount depends on your pensionable salary, with a minimum fixed amount guaranteed. The EPF pension rules for private employees make it clear: EPS isn’t just about retirement it’s about safeguarding your loved ones when you're gone.

5. Child Pension

   Children under 25 are also entitled to support through the Employees' Pension Scheme. If an EPS member dies, up to two surviving children receive a child pension and the widow’s pension. This ensures the children’s education and upbringing are not disrupted due to financial hardship. This form of the EPS pension continues until each child reaches age 25, offering significant financial relief during their formative years.

6. Orphan Pension

   If both parents of an EPS member pass away, the scheme steps in with the orphan pension. Under this provision, the orphaned child receives 75% of the widow's pension. The support continues until the child reaches the age of 25. This powerful feature of the EPS 95 pension scheme reinforces its role as more than just a retirement plan, it’s a safety net that catches the entire family during life’s worst tragedies.

7. Nominee Pension

   In cases where the EPS member has no surviving spouse or children, the nominee's pension comes into play. The individual nominated in the EPS record receives the pension benefits. This ensures that someone of your choice is not left financially unsupported in your absence. If you’re wondering what is EPS and how far its benefits go, the nominee provision highlights its thoughtful design to leave no one behind.

Application Process for EPS

Applying for the EPS provident fund benefits is straightforward:

• Ensure UAN Activation: Your Universal Account Number (UAN) should be activated and linked with your Aadhaar and bank account.
• Submit Form 10D: This form is used to claim monthly pension benefits.
• Submit Form 10C: If you're withdrawing the EPS amount before completing 10 years of service, this form is applicable.
• Online Submission: You can submit these forms through the EPFO Member Portal.
• Offline Submission: Alternatively, you can submit the forms at your nearest EPFO office.

How to Check Your EPS Balance?

Here’s how you can check where you stand:

• Visit EPFO’s official website.
• Go to ‘Services’ and click on ‘For Employees’.
• Select ‘Member Passbook’.
• Log in using your UAN and password.
• View contributions to both EPF and EPS accounts.

If you're more of a mobile-first person, use the UMANG App or EPFO mobile app.

EPS Pension Forms You Might Need

Understanding the EPS pension process becomes much easier when you know which forms to use and when. Whether you’re applying for pension benefits, transferring your fund, or making a nomination, the EPS 95 pension scheme offers specific forms to meet every need. If you're part of the EPS in PF structure, here's what you should keep in mind.

1. Form 10C – For Withdrawal Benefits

   If you’ve worked for less than 10 years and want to withdraw the pension amount you've accumulated under the EPS scheme, you’ll need Form 10C. It’s primarily used by employees who are either changing jobs and not transferring their EPS or those who are leaving the job market entirely before hitting the 10-year mark. This is not for a monthly pension, just a one-time withdrawal of your EPS provident fund contributions.

2. Form 10D – To Claim Monthly Pension

   So, you’ve completed 10 years of eligible service and are now ready to receive your monthly pension under the EPS pension 2900 (or more, depending on your contributions)? Form 10D is what you’ll need. This is the go-to form for regular pensioners, including those applying under the categories of superannuation, early pension, disability, widow, child, or orphan pension. According to EPF pension rules for private employees, this form is essential to initiate your lifelong monthly payouts under the Employees' Pension Scheme.

3. Form 20 – For Pension Nomination

   If you’re wondering, what is EPS nomination, and how do I ensure my family is protected, Form 20 helps you nominate a beneficiary for your EPS account. This becomes crucial in case of your untimely demise. Nominating your spouse or dependent family members ensures they receive the benefits from the EPS 95 pension scheme without any complications or delays.

4. Form 5 (IF) – For Nominee Declaration in Unexempted Establishments

   For those working in companies that are not exempt from the EPF Act, Form 5 (IF) allows employees to declare their nominee for the EPS in PF structure. This form complements Form 20 and helps maintain clarity in nominee records with the Employees’ Provident Fund Organisation (EPFO). It plays a vital role in ensuring that your family continues to receive support even after you're gone.

5. Form 13 – To Transfer EPF and EPS When Changing Jobs

   Changing jobs? Don’t forget Form 13. It’s used to transfer your EPF and EPS accounts from your previous employer to the new one. This form keeps your EPS pension benefits intact, maintaining your years of service record, which is crucial when calculating your pension eligibility later. If you skip this, you risk breaking the service continuity needed under EPF pension rules for private employees, which may prevent you from qualifying for monthly pension benefits in the future.

While the EPS scheme offers a government-backed safety net, it may not always be sufficient to cover your full retirement lifestyle, especially given inflation and rising medical costs. That’s where private retirement plans step in to complement your pension corpus.

Presenting PNB MetLife Saral Pension Plan – an individual, single-pay, non-linked, non-participating Immediate Annuity Plan, designed as per the guidelines of the Insurance Regulatory & Development Authority of India (IRDAI). This plan ensures that your golden years remain stress-free and financially secure.

Here's how it protects you and your loved ones:

• Protect Your Family: You can choose the Joint Life Annuity option, where both you and your spouse receive a lifetime pension. In the unfortunate event of your demise, the annuity continues for your spouse.
• Leave a Legacy: Select the Return of Purchase Price feature, enabling your nominee to recover the principal amount of investment upon demise, thus safeguarding your family’s finances.
• Customise Your Pension Contract: Select among: Life annuity with a 100% refund of the purchase price and Joint life last survivor annuity with a 100% refund of the purchase price.
• Pay Once, Earn For Life: Get a pension for life, just a single payment, and no continual premiums to worry about.
• Choose Your Payout Frequency: Monthly, quarterly, half-yearly, or yearly, whatever works best for your lifestyle and needs.

What Happens to the EPS Amount If You Change Jobs?

If you change jobs, your retirement benefits under the Employees' Pension Scheme (EPS) are not transferable to the new employer’s EPS account. Knowing this is critical for your financial planning, particularly if you consider the best NPS option for your retirement as a supplementary income to your pension, which will need careful consideration in the long run.

The Employees’ Provident Fund (EPF) is the nugget of the retirement saving schemes, where both you and your employer share a portion of your monthly salary.

Unlike EPF, your EPS balance will not automatically move to your new employer's pension account. Rather, it will remain with the EPF Organisation (EPFO), retaining a link to your UAN.

What Happens to Your EPS Contributions?

Even if your EPS amount fails to shift with the job, it can still be tracked. This is how it continues to serve the purpose of your retirement planning goals:

• Your EPS account remains linked permanently with your Universal Account Number (UAN). Since this number is your constant identity, no matter how many jobs you change, all contributions made towards your pensions automatically get consolidated under one account, which is managed efficiently.
• The amount is determined by your average salary and the sum total of years you have worked in the system in all your employment.

Ensuring a Smooth Transition of Benefits

To ensure that your EPS scheme contributions are properly recorded and eventually credited when you retire, it is crucial to submit Form 10C each time you change jobs. This form allows you to claim withdrawal benefits (if applicable) or carry forward the service record, which is vital for pension calculation. It essentially keeps your EPS provident fund journey seamless and uninterrupted.

Final Thoughts

The effort you are putting in today will grant you respite tomorrow. The EPS scheme is very reliable in maintaining a smooth, hassle-free life in your later years. Rest assured, it is not just by yourself, your family, the future or peace of mind that is all equally important.

The EPS is something that one should definitely get. Having this service in PNB MetLife makes the journey smoother. They help you comprehend the details regarding the EPS and calculate the amount you will be eligible to receive in your EPS.

Start with our retirement savings plan or simply use the convenient online PNB MetLife retirement planning calculator, and let’s strategise on how to turn the best years you deserve into reality.

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