Employee Pension Scheme: Check EPS Eligibility, Benefits, Contribution and more

The Employee Pension Scheme (EPS) is a part of the Employees’ Provident Fund (EPF) scheme, which is managed by the Employees’ Provident Fund Organization (EPFO) in India.

This page covers everything you need to know about employee pension schemes, including eligibility, benefits, contribution, and more.

As an employee, one of the most important things to consider when it comes to financial planning is retirement. While it may seem like something that’s far away, it’s never too early to start preparing for it.

This is where employee pension schemes come into play. An employee pension scheme is a retirement savings plan that is set up by your employer, and it’s designed to help you save money for your retirement years.

As a part of employee benefits, many organizations offer pension schemes to their employees. Employee Pension Scheme (EPS) is a government-backed pension scheme that provides financial assistance to the employees after their retirement.

Under the EPS, an employer is required to contribute a certain percentage of an employee’s basic salary plus dearness allowance (DA) towards the employee’s pension fund. The employee also contributes a certain percentage of their basic salary plus DA towards the pension fund.

The pensionable salary under the EPS is limited to a maximum of Rs. 15,000 per month. The pension amount is calculated based on the length of service of the employee and their average monthly salary in the last 12 months before their retirement.

The pension is payable from the age of 58, but employees can opt for early retirement from the age of 50. In case of the death of an employee, their family members are eligible for a pension.

Overall, the EPS provides a social security net to employees by ensuring a regular pension after their retirement, and is an important part of the EPF scheme managed by the EPFO.

What is the Employee Pension Scheme (EPS)?

An employee pension scheme is a retirement savings plan that is set up by an employer for their employees. The scheme is designed to help employees save money for their retirement years by making regular contributions to the scheme.

Employee Pension Scheme is a part of the Employees’ Provident Fund (EPF) that provides financial assistance to employees after their retirement.

It is a social security scheme for employees in India and is managed by the Employees’ Provident Fund Organisation (EPFO). The scheme applies to employees who are members of the EPF and has completed ten years of service.

Employee Pension Scheme
Employee Pension Scheme
Name of the SchemeEPS Scheme 2023
TitleCheck the EPS Scheme 2023
SubjectEPFO manage the EPS 2023
CategoryScheme
Websitehttps://www.epfindia.gov.in/
Employee’s Pensions SchemePension Scheme 1995 (EPS)
EPS 95 Details

Eligibility for EPS

To be eligible for EPS, an employee must meet the following criteria: Employees who are covered under the Employees’ Provident Fund (EPF) scheme are eligible for the Employee Pension Scheme (EPS) managed by the Employees’ Provident Fund Organization (EPFO) in India.

The EPS applies to employees who are working in an establishment that employs 20 or more people. However, in certain industries such as jute, beedi, brick, and coir, the EPS applies even if the establishment has fewer than 20 employees.

Must have completed ten years of service: To be eligible for the EPS, an employee must have completed at least 10 years of service in an establishment that contributes to the EPF scheme.

If an employee leaves the job before completing 10 years of service, they are not eligible for a pension under the EPS. However, they can withdraw their contributions to the pension fund along with their EPF balance.

Additionally, employees who are members of the EPF scheme are automatically enrolled in the EPS, and their employer is required to contribute towards their pension fund. The employee is also required to contribute towards their pension fund, and the contribution is deducted from their salary every month.

Benefits of EPS

The Employee Pension Scheme (EPS) managed by the Employees’ Provident Fund Organization (EPFO) in India provides several benefits to employees. The EPS offers the following benefits to the employees

1. Pension after Retirement

The primary benefit of EPS is that it provides a pension to employees after their retirement. The pension amount depends on the years of service and the average monthly salary of the employee.

2. Pension in case of Permanent Disability

EPS also offers a pension to employees in case of permanent disability. The pension amount is calculated based on the years of service and the average monthly salary of the employee.

3. Pension to Nominee in case of Death

In case of the death of an employee, EPS offers a pension to the nominee of the employee. The pension amount is calculated based on the years of service and the average monthly salary of the employee.

4. Withdrawal of Pension Contribution

If an employee does not complete ten years of service and leaves the organization, they can withdraw their pension contribution.

Features of Employee Pension Scheme

There are several features of an employee pension scheme, including:

  1. Tax Benefits: Contributions made to an employee pension scheme are tax-deductible, which means you can save on your tax bill.
  2. Employer Contributions: In some cases, your employer may contribute to your employee pension scheme, which can help to boost your retirement savings.
  3. Regular Savings: An employee pension scheme provides a disciplined way to save for your retirement years, as regular contributions are made on your behalf.
  4. Retirement Income: When you retire, you can use the funds in your employee pension scheme to provide you with a regular income.

How EPS Works

The employer and employee contribute 12% of the employee’s basic salary towards the EPF, out of which 8.33% is contributed towards EPS. The contribution towards EPS is limited to Rs. 1250 per month, which means that the maximum contribution towards EPS is Rs. 15,000 per annum. The pension amount is calculated based on the years of service and the average monthly salary of the employee.

Contribution to EPS

Under the Employee Pension Scheme (EPS) managed by the Employees’ Provident Fund Organization (EPFO) in India, both the employer and the employee are required to contribute towards the employee’s pension fund.

The employer is required to contribute 8.33% of the employee’s basic salary plus dearness allowance (DA) towards the pension fund, subject to a maximum pensionable salary of Rs. 15,000 per month. If the employee’s actual basic salary plus DA is less than Rs. 15,000 per month, the employer’s contribution will be based on the actual salary.

The employee is also required to contribute a certain percentage of their basic salary plus DA towards the pension fund. The employee’s contribution is 12% of their basic salary plus DA, which is the same as the contribution towards the EPF scheme.

Out of the employee’s contribution of 12%, 8.33% is diverted towards the EPS, subject to the maximum pensionable salary of Rs. 15,000 per month. The remaining 3.67% is contributed towards the EPF scheme.

The contributions made towards the EPS by the employer and the employee are invested in the pension fund and are used to provide a regular pension to the employee after retirement. The pension amount is calculated based on the length of service and the average monthly salary of the employee.

Frequently Asked Questions (FAQs)

  1. What is the difference between EPF and EPS?

    EPF is a savings scheme that helps employees save money for their retirement, whereas EPS is a pension scheme that provides financial assistance to employees after their retirement.

  2. Can an employee withdraw their EPS contribution before retirement?

    No, an employee cannot withdraw their EPS contribution before retirement. However, if an employee does not complete ten years of service and leaves the organization, they can withdraw their pension contribution.

  3. Is EPS mandatory for all employees?

    No, EPS is not mandatory for all employees. It is applicable only to employees who are members of the EPF and have completed ten years of service.

  4. Can an employee opt-out of EPS?

    No, an employee cannot opt-out of EPS. It is mandatory for employees who are members of the EPF and have completed ten years of service.

  5. Can an employee get a pension from both EPF and EPS?

    Yes, an employee can get a pension from both EPF and EPS, provided they meet the eligibility criteria for both schemes.

*Disclaimer: We have published the above information for reference Purpose only, For any changes on the content we refer to visit the Official website to get the latest & Official details, and we are not responsible for anything

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