- 8.33% of employer’s monthly contribution from the EPF goes into EPS. Monthly contribution to EPS is restricted to 8.33% of 6500 or Rs 541 p.m and from Sep 2014 Rs 1250 (8.33% of 15,000). Government’s contribution is of 1.16% of the worker’s monthly wages if salary less than Rs 6,500.
- Unlike the EPF contribution EPS part (8.33% out of 12% contribution from your employer or Rs 541 and after Oct 2014 Rs 1250 what ever is minimum) does NOT get any interest.
- Lifelong pension is available to the member and upon his death members of the family are entitled for the pension.
- Pension is called Superannuation pension if one gets pension on retiring on attaining the age of 58 years
- A employee can start receiving the pension under EPS only after rendering a minimum service of 10 years and attaining the age of 58/50 years.
- One can apply for EPS Pension from a date immediately following the date of completion of 58 years of age notwithstanding that the person has retired or ceased to be in the employment before that date.
- Maximum Pension one can get is Rs 7,500 per month.
- Minimum Pension one can get is Rs 1,000 per month.
- Maximum service for the calculation of service is 35 years.
- The fraction of service for six months or more is treated as one year and the service less than six months shall be ignored. So 9 years and 6 months will be rounded up to 10 years.
- If no wage is earned for a certain period, that period is to be deducted from the service, as there will be no contribution to Pension Fund.
- If one resigns before completing 9 years and 6 months of service, you get the “withdrawal benefit” which depends on your monthly salary and the no. of years of service.
- No pension is payable before the age of 50 years.
- Early pension can be claimed after 50 years but before the age of 58 years. But it is subject to discounting factor @ 4% (w.e.f. 26.09.2008) for every year falling short of 58 years. In case of death / disablement, the above restrictions doesn’t apply.
- No pensioner can receive more than one EPF Pension. So if you have worked in multiple organizations you meed to consolidate all your EPS and then apply for EPS Pension. If you have multiple Scheme Certificate you need to submit all of those.
- EPS Pension is taxable and has to be considered under the head Income from Salaries.
- How much EPS Pension will you get if you joined after 15.11.1995
- For those who joined after 15 Nov 1995 the formula for calculation of Pension is simple. the formula of calculation of pension is,
EPS Pension = Average Salary X Number of Years Service/70
** Make an Attention on the following Points:
1. Number of Years of Service in calculating EPS Pension
- You are eligible for pension after the 10 years of contributing to EPS. If your number of years are less than 10 you can withdraw your EPS amount.
- Maximum service for the calculation of service is 35 years.
- If you have completed more than 20 years in service then add two years bonus in above equation.
- The fraction of service for six months or more is treated as one year and the service less than six months is ignored. So 9 years and 6 months will be rounded upto 10 years, 15 years 9 months will be rounded to 16 years but 15 years 3 months will be rounded to 15 years.
- If you withdraw your EPS from earlier job,through Form 10C, then earlier years of service will not be counted. Salary in calculating EPS Pension
2. The Average Salary here means pensionable salary in the scheme.
- Pensionable Salary here means amount you were contributing in EPS which is restricted to Rs 15,000 per year after 1 Sep 2014 and was Rs 6500 per year before 1 Sep 2014.
- It is arrived by considering the average contributing salary preceding 60 months from the date of exit. (Earlier it was preceding 12 months)
*** Lets look at examples of EPS Pension Calculation.
## How much pension will Mr.A get if he works for 14 years from 1 Jun 2015
Mr.A started his job on 1 Jun 2015. He works for 14 years. His average salary is 20,000 per month but for pension service maximum salary considered is Rs 15,000 or Rs 1250 per month. So Mr. A pension from 2 Jun 2030 will be Rs (15,000 X 14)/70 = Rs 3000 per month.
## How much pension will Mr. A get if she works for 10 years from 1 Sep 2007 and retires on 1 Sep 2017
As Mr. A has contributed Rs 1250 per month from 1 Sep 2014, if he retires on 1 Sep 2017, her pensionable salary for last 60 months or 5 years will be Rs 11,600.
hence his pension would be (11600 X 10/70) = Rs 1657 per month
## How much pension will Mr. A get if he works for 20 years from 1 Sep 2010 and retires on 1 Sep 2030
As Mr. A has contributed Rs 1250 per month from 1 Sep 2014, if he retires on 1 Sep 2016 his pensionable salary for last 60 months or 5 years was Rs 15000 So his pensionable salary will be considered as (Rs. 15000*5 )/5= Rs 15000 per year. But as he has worked for 20 years she would get 2 years of bonus,
hence his pension would be (15,000 X 22/70) = Rs 4714 per month.
## What is the maximum amount of Pension available under EPS?
Based on a maximum employment period of 35 years, and maximum contribution of Rs 15000, the maximum amount of pension as per the Pension formula would be = 15000 * 35/70 = Rs 7,500 per month or Rs. 90,000(7500 * 12) per year. On the above discussion and example you can understand each and everything of Employee Pension Scheme.
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