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What is EPF Pension Scheme? Benefits of EPF Pension Scheme

IndianMoney.com Research Team | Posted On Wednesday, February 06,2019, 06:15 PM

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What is EPF Pension Scheme? Benefits of EPF Pension Scheme

 

 

What is EPF Pension Scheme?

EPF Pension Scheme was introduced in the year 1995 to cater to the pension needs of the employees in the organized sector. All employees registered under the EPFO can avail the benefits of employees’ pension scheme provided they complete 10 years of service. There are a host of other benefits covered under the EPS scheme that extends to spouse/ nominee and dependent children of the members. The EPS is clubbed with the EPF scheme which gives a lump sum as well as pension after retirement.

SEE ALSO: Tips To Buy Pension Plans

Who gets the pension through EPS?

All members registered under the EPF can avail this scheme. So the scheme can be availed by workers of the organized sector who make monthly contributions towards the EPF. The employees’ pension scheme is combined with the EPF. The government has upgraded the minimum pension amount to Rs 1000 a month. Earlier the pension granted was a meagre Rs 500  a month.

Benefits of EPF Pension Scheme:

All members enrolled under the EPF scheme are eligible to get pension benefits provided they make regular contributions to EPF accounts. The amount varies from person to person. Listed below are the benefits of the EPF pension scheme:

  • A member only becomes eligible for the pension scheme when he retires at the age of 58. It is compulsory to have a continuous service of 10 years before retirement to avail the benefits of this scheme.
  • The pension plan is backed by the government of India hence there is no chance of a default. You can rely on it.
  • You can avail pension after attaining the age of 50 years at a reduced rate.
  • On death of the pensioner the pension is given to the spouse/nominee.
  • A child with permanent disability gets pension till death.
  • It is a guaranteed pension plan and the amount of pension does not change after retirement

SEE ALSO: What is a Retirement Planning?

What is the contribution for EPF?

The EPF is deducted from the total salary of an individual from the moment he joins an organization or company.  EPF contribution includes deposits made by both the employee and the employer.  The employee contributes 12% of the basic salary plus dearness allowance to EPF. The entire 12% of contribution goes into the EPF account along with 3.67% (out of 12%) from the employer. The remaining 8.33% of employer’s contribution  goes to Employee’s Pension Scheme.

Employee Pension Scheme (EPS) Eligibility Criteria:

The employee/member must fulfil the eligibility criteria as prescribed by the EPFO to become eligible to avail the benefits of employees’ pension scheme. The eligibility criteria are as follows:

  • The member must be registered under the EPFO.
  • The member should have completed 10 years of service.
  • The member must retire or attain the age of 58.
  • The member can also withdraw his EPS at a reduced rate from the age of 50 years.
  • The member can also defer his pension for two years (up to 60 years of age) after which he will get a pension at an additional rate of 4% for each year.

See Also: pension plans in india

 Terms and conditions of Employee Pension Scheme:

Some of the terms and conditions of the pension scheme that you should know are as follows:

  • To be eligible to receive pension through the Employees pension scheme the member must complete 10 years of service.
  • The member can only avail the pension after the age of 50 years.
  • The employee must not have more than one EPF account.
  • The government has also removed the provision for commutation of pension scheme.
  • The maximum contribution of the government towards the EPF pension scheme is not more than Rs 174

What is Pension Scheme Certificate?

Pension scheme certificate is provided to the employee who does not complete the minimum service period of 10 years. In this case the member can also opt for pension scheme certificate instead of opting for the pension scheme. Whenever the member rejoins service, the pension scheme certificate is used to add up the previous years of service. Due to this provision made by the government, the employees do not need to complete the 10 years service period again for availing the benefits of pension scheme.

Reduced Pension Before 58:

A member can withdraw the pension early if he has already completed 10 years of service and has attained the age of 50 years. In this case the pension amount will be reduced by 4% for every year falling short of 58 years.

Enhanced Pension After 58:

The EPFO has also introduced the provision for an enhanced pension. You can avail extra pension of an additional 4% if you avail the scheme after the age of 58 years. However, you can get only two such years as this benefit is not available after the age of 60.

Forms Related To Employee Pension Scheme (EPS):

There are various forms that must be submitted on different occasions to avail the benefits of the employee provident fund scheme. The forms related to the EPS are as follows:

Form name

Filled by

benefits

Form 10C

Member or beneficiary

Withdrawal benefit

Scheme certificate

Form 10D

Member

To avail disability pension

To avail pension after the age of 58

To avail pension after 50 but before turning 58 years of age.

Form 10D

Nominee/widow/widower/ children

To avail nominee/pension or children pension or family pension

Life Certificate

Pensioner

To be submitted by pension beneficiary or children every November

To be submitted to the manager of pension disbursing banks

 

Non-remarriage Certificate

Widow/widower

To be submitted by widower every year

To be submitted by widow at the beginning of pension

To be submitted to the manager of pension disbursing banks

 

FAQ on EPS

Is employee the only beneficiary of the Fund?

The benefits will be paid to the member. After his death the benefits will be extended to his family i.e. spouse/dependent children

Suppose employee does not have a Family and he/she dies before receiving benefit. Does his/her pension get lost?

In case the member does not have a family then the benefits will be given to the nominee.

How many years service is required to be eligible to receive pension?

The member must complete 10 years of service period to get the benefits of employees provident fund.

Can member not get pension earlier?

Yes, the member can opt to get pension once he reaches the age of 50 years. However the pension will be reduced by 3% for each year falling short of 58 years.

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