EPS-95 Pension Scheme 1995: New Rules for Employees

How EPS-95 Pension is Calculated.

The monthly pension an employee receives through the EPS-95 scheme is determined by their pensionable service and pensionable salary. The formula used to calculate the monthly pension is:

• Pensionable Salary: This is the average monthly salary an employee earns during the 60 months immediately preceding their exit from the Employees’ Pension Scheme. This calculation is based on a Supreme Court judgement from November 4th, 2022, which updated the previous method of considering the average monthly salary of the last 12 months of scheme participation.
• Pensionable Service: This refers to the total number of years for which contributions were made to the EPS account. According to EPS rules, any service period of 6 months or more is rounded up to a full year. Any period less than 6 months is disregarded. Additionally, if an employee superannuates at the age of 58 and has served for more than 20 years, their service tenure is increased by 2 years for pension calculation purposes.

Benefits of the EPS-95 Pension.

Eligible employees can access several benefits under the EPS-95 scheme:

• Pension from Age 58: An EPS member becomes eligible for a pension upon retiring at age 58, provided they have contributed for a minimum of 10 years. Upon retirement, they receive an EPS pension scheme certificate, essential for completing Form 10D to withdraw the monthly pension.
• Pension in Case of Disability: If an EPS member becomes completely and permanently disabled, they are entitled to a monthly pension, irrespective of whether they have completed the minimum pensionable service period. The pension commences from the date of permanent disability and continues for their lifetime. To be eligible, the employer must have deposited funds into the member’s EPS account for at least one month, and the employee must undergo a medical test to verify their inability to continue their previous job due to the disability.
• Pension in Case of Employee’s Death: In the event of an EPS member’s death, their family is eligible for family pension benefits under the following circumstances:

• If the member completed 10 years of service and dies before the age of 58.
• If the member dies after commencing receipt of a monthly pension.
• If the member dies while still in service, provided the employer has made at least one deposit into their EPS account.

• Withdrawal Facility Before Pension Eligibility: If an EPS member is unable to complete 10 years of service and reaches 58 years of age, they can withdraw their accumulated EPS amount by filling out Form 10C. However, they will not be eligible for a monthly pension in this case.

Contributions to the Employees’ Pension Scheme (EPS).

Both the employer and the employee contribute 12% of the employee’s basic salary plus Dearness Allowance (DA) towards the Employees’ Provident Fund (EPF) scheme. The employer’s 12% contribution is divided as follows:

• EPF Contribution: 3.67%
• EPS Contribution: 8.33%

In addition to these contributions, the Government of India contributes 1.16%. Employees are not eligible to contribute directly to the EPS.

How to Check Your EPS Balance.

You can check your EPS balance using your Universal Account Number (UAN) on the EPFO portal. First, you need to activate your UAN. Here’s a step-by-step guide:

1. Go to the official EPFO website: https://www.epfindia.gov.in/site_en/index.php.
2. Under the “Our Services” menu, click on “For Employees.”
3. On the next page, click on “Member Passbook.”
4. Enter your UAN, password, and captcha details, then click “Login.”
5. You will see a list of Member IDs. Click on the relevant Member ID.
6. The total pension amount contributed will be displayed under the “Pension Contribution” column.
7. You can also download and print the statement.

EPS Pension Calculation: A Detailed Overview

The method for calculating your EPS pension depends on when you joined the scheme. Here’s a breakdown of the calculations for individuals who joined before and after November 16, 1995:

Pension Calculation for Those Who Joined Before November 16, 1995.

For individuals who joined an organization before November 16, 1995, the pension amount is typically fixed based on their salary and years of service, as per the table below:

For those who joined on or after November 16, 1995, the pension is calculated using the following formula:EPS Pension = (Service Period x Pensionable Salary) / 70

• Pensionable Salary: As previously detailed, this is based on the average income earned over the last 60 months (5 years) of service.
• Service Period: The total number of years for which contributions were made.

EPS Withdrawal Rules.

The rules for withdrawing your EPS amount depend on your length of service:

• Less Than 10 Years of Service: If you’ve worked for less than 10 years, you are eligible to withdraw your EPS amount, but only after leaving the company and before starting a new job. You can claim this by submitting Form 10C on the EPFO portal. To withdraw online, your UAN must be active, and your KYC details must be linked to it. Note that if you’ve worked for less than six months, you can apply for a scheme certificate, but you cannot withdraw the EPS amount.
• More Than 10 Years of Service: If you have completed more than 10 years of service, you are no longer eligible for EPS withdrawal. However, you can apply for a scheme certificate by filling out Form 10C.

Key EPS Forms.

Here’s a summary of important EPS forms:

To check the amount in your EPS account, follow these steps:

1. Visit the official EPFO website: https://www.epfindia.gov.in/.
2. Click the ‘For Employees’ link under the ‘Our Services’ section.
3. Go to ‘Services’ and choose ‘Member Passbook.’
4. You will be redirected to the Unified Member Portal. Log in using your UAN, password, and captcha code.
5. You will be taken to the Member Passbook page where you can examine the specifics of your EPF account.
6. Scroll down to find the “Pension Contribution” section, which details your EPS contributions and the total amount.

Important Points to Remember About EPS.

• All contributions to the EPS account must be made by the employer.
• An employee’s remuneration includes basic salary plus dearness allowance, a retention allowance, and the allowable cash worth of food concessions.
• The employer is required to cover all applicable contribution costs.
• The employer contributes 8.33% of the employee’s salary to EPS.
• The employer must contribute within 15 days of each month’s end.
• A minimum of 10 years of service is required to receive pension benefits.
• All workers employed by the major employer, whether directly or through a contractor, are required to make contributions.
• A person must be 58 years old to retire under the plan.
• An employee no longer qualifies as a member of the pension fund after turning 58 years or when they begin receiving a reduced pension at age 50 years.
• You may withdraw the EPS amount after being out of work for more than two months if you have fewer than ten years of service but more than six months of service.

EPS 95 vs. NPS Pension Schemes.

• EPS 95: Extended for employees who are Employees’ Provident Fund (EPF) account holders.
• NPS: A voluntary scheme that employees can invest in.

Both schemes provide retirement benefits for employees.

Key Differences Between EPF and EPS.

• EPF: Does not pay a pension if there is no contribution by the employee and the employer.
• EPS: Pays a pension even without contribution in specific scenarios (e.g., disability).

FAQs

• Is there a minimum limit for pension in EPFO?
  • Yes, the government provides a minimum pension of ₹1,000 to pensioners.
• What is the salary limit for EPS 95?
  • ₹15,000 is the salary limit for EPS 95.
• What is the formula for calculating EPF pension?
  • The formula is (Pensionable Salary x Pensionable Service)/70. For example: (15,000 x 35)/70 = ₹7,500. To qualify for pension benefits, EPF subscribers must have served for at least 10 years and retire after reaching the age of 58.

EPF New Rules for Employees 2025.

The EPFO has introduced several changes for 2025 to improve services and efficiency:

• Easier PF Transfer: Online transfer requests no longer need to be routed through employers in many cases.
• Member Profile Updates: Aadhaar-verified UAN holders can directly update personal details online without submitting documents.
• Joint Declaration Simplification: A streamlined process replaces specific recommendations from SOP Version 3.0.
• Centralized Pension Payment System (CPPS): No more PPO transfers due to banking jurisdictions, and pensioners can use their UAN-KYC linked accounts for pension receipts.
• Higher Pension Guidelines Update: Ensures fair and uniform pension calculation, adherence to trust rules, and separate handling of dues and arrears.

These updates aim to make managing your EPF and EPS accounts easier and more efficient.

Recent EPF Changes.

Joint Declaration Process.

The EPFO has issued a new circular on the Joint Declaration process, simplifying it and replacing certain recommendations from SOP Version 3.0. The new guidelines include classifications for members, revised document submission methods, and updated procedures for employers and claimants.

Centralized Pension Payment System (CPPS).

The EPFO has implemented the Centralized Pension Payment System (CPPS), effective January 1, 2025. CPPS enables pension payments through the National Payments Corporation of India (NPCI), allowing pensions to be processed for any bank account, in any branch, of any scheduled commercial bank across India.

Clarification on Higher Pension.

The EPFO issued a new circular outlining policy clarifications on the processing of pension cases for individuals receiving higher earnings under the Employees’ Pension Scheme (EPS). The clarifications focus on:

• Ensuring equity in pension computation between categories of pensioners.
• Following trust rules strictly for exempted establishments.
• Maintaining clear processes for dues and pension arrears without mixing the two.

EPF Member Profile Updation.

The EPFO has simplified the member profile update process. Members whose UAN has been verified via Aadhaar can update their personal information without uploading supporting documentation. The update would only need the employer’s certification in specific situations if the UAN was issued before October 1, 2017.

Transfer of PF.

The EPFO has simplified the procedure for transferring Provident Fund (PF) accounts for members who change jobs. Online account transfer requests no longer need to be routed via past or present employers in many cases.