EPS 95 Pension Scheme

EPS-95 Pension Scheme

In India, a range of pension schemes are available to ensure financial security for employees during their retirement years. The Employee Provident Fund Organisation (EPFO) is primarily responsible for managing this system, guaranteeing that employees receive a pension once they reach the age of 58. Both employers and employees are required to contribute towards building the pension fund for the future. Continue reading to discover comprehensive information about the EPS 95 pension scheme.

Introduction to EPS 95 Pension Scheme:

The EPS-95, or Employee Pension Scheme 1995, is a social security initiative introduced by the Employees’ Provident Fund Organisation on November 19th, 1995. This program extends pension benefits to organized sector employees upon their retirement. The EPFO oversees the scheme, ensuring that employees who attain the age of 58 are eligible for pension benefits.

This scheme’s advantages are accessible to both current and new members of the EPF. Both parties involved – the employee and the employer – contribute 12% of the employee’s wage, which encompasses the basic salary and dearness allowance (DA), to the EPF. The employee’s entire contribution is directed to the EPF each month. In contrast, 8.33% of the employer’s contribution is allocated to the Employees’ Pension Scheme, and the remaining 3.67% is directed to the Employees’ Provident Fund.

EPS 95 Minimum Pension:

Regardless of the amount contributed to the Employee Pension Scheme, the Indian Government has set a minimum range for pensions. Employees are entitled to this sum, irrespective of their contributions.

Under this scheme, the government ensures a fixed minimum pension ranging from Rs. 1,000 to Rs. 2,000 per month for pensioners. The government launched this initiative on September 1st, 2014, alongside additional financial backing for the EPF scheme.

Beyond the contributions of employees and employers, the Government provides additional support amounting to 1.16% of each employee’s wage for the Employees’ Provident Fund Scheme. This supplemental support from the Government is available up to a maximum of Rs. 15,000 per month.

Latest Updates on EPS 95 Pension:

A press release dated May 3rd, 2023, issued by the Ministry of Labour & Employment, announced that employees choosing a higher EPS pension would no longer need to make separate contributions. The additional 1.16% of their salary, previously paid above the wage ceiling, will now be sourced from the employer’s 12% contribution. This decision aligns with a Supreme Court directive to establish a new methodology.

Furthermore, the deadline for applying for a higher pension has been extended to June 26th, 2023. According to the prevailing pension calculation method under EPS 95, the pension amount depends on total service duration and the average basic salary over the last 5 years. Hence, a longer service period translates to greater benefits from the pension plan.

EPS 95 Pension Eligibility:

To access EPS 95 benefits, certain eligibility criteria must be met:

1. Membership in the EPFO is a prerequisite.
2. A minimum of 10 years of service is mandatory.
3. The standard retirement age for pension eligibility is 58 years. However, early retirement allows for a reduced-rate pension.
4. Opting to receive pension benefits from age 60 leads to a 4% yearly increase.
5. Those with over 6 months (but less than 10 years) of service can withdraw their EPS funds if unemployed for over 2 months.
6. Total and permanent disability entitles an employee to a monthly pension, irrespective of service duration, pending a medical evaluation.
7. In the event of an employee’s demise while in service, family members might qualify for pension benefits.

How to Apply to apply EPS 95 Online?

Here is a step-by-step guide to applying EPS 95.

1. Visit the member e-Sewa portal.
2. Find “Pension on higher salary: Exercise joint option by May 3, 2023” and click.
3. Choose “Application form for joint options – Under EPS 1995 para 11 (3) and para 11 (4) for pre-Sept 2014 employees still in service post-Sept 2014. Complete by May 3, 2023.”
4. Input UAN, Name, DOB, Aadhaar details, mobile, and captcha.
5. Tap “Get OTP.”
6. Receive OTP on Aadhaar-linked mobile.
7. Proceed.

Rules Governing EPS 95 Pension:

Several rules guide the Employee Pension Scheme 95:

1. Employees earning Rs. 15,000 or less per month are mandated to enrol in this scheme.
2. Employers must contribute within 15 days of each month’s end.
3. In cases where a widow or widower remarries after the employee’s death, children will receive the pension.
4. Employee contributions comprise basic salary, dearness allowance, admissible cash value of food concessions, and retaining allowance.
5. Online EPS transfers can be initiated using a composite claim form.
6. Different forms serve various purposes for EPS access by family members, such as Form 10C for withdrawals before completing 10 years of service, Form 10D for monthly pension withdrawals after age 50, and others for certification and transfer.
7. EPS account balance can be checked through the EPF passbook portal, detailing monthly contributions.

EPS 95 Pension Calculation:

An employee’s monthly pension hinges on pensionable service duration and salary. The formula for calculating monthly pension is:

Member’s Monthly Pension = (Pensionable Salary x Pensionable Service) / 70

Pensionable Salary:

The average monthly wage earned during the last 60 months before exiting the Employees’ Pension Scheme. The Supreme Court’s ruling on November 4th, 2022, adjusted this from the previous 12 months.

Pensionable Service:

This accounts for the total years of contributions made to the EPS account. The law mandates rounding pensionable service to the nearest year, treating service of 6 months or more as a year. If service is under 6 months, it’s not counted. Superannuating at 58 with over 20 years of service increases the tenure by 2 years.

Benefits of EPS 95 Pension:

Eligible EPS pension recipients gain various advantages:

1. Pension at 58: Eligibility starts at age 58 with a requisite 10 years’ contribution. Retirees receive an EPS pension scheme certificate for Form 10D withdrawal.
2. Disability Pension: Complete and permanent disability prompts monthly pension payments, regardless of service duration, upon medical validation.
3. Death Pension: EPS members’ families receive a family pension under specific circumstances, such as 10 years’ service, receiving a monthly pension, or depositing funds by the employer.
4. Early Withdrawal: If members can’t complete 10 years of service by age 58, they can withdraw their invested amount via Form 10C. No monthly pension is provided in this case.

Conclusion

The EPS 95 scheme offers various pension types, including widow, orphan, child, and reduced pensions. It serves as a valuable investment tool for the future, providing flexibility and tax-saving benefits.