Amid the discussion on the newly introduced Unified Pension Scheme, one must know that a wide range of pension schemes are designed to protect workers’ financial security in their retirement years. The main regulatory authority responsible for these schemes is the Employee Provident Fund Organisation (EPFO), which guarantees that employees will receive a pension when they turn 58. It is vital for both employees and employers to make regular contributions to build a substantial fund that will later convert into a pension for employees during their retirement years.
What Is EPS 95 Pension Scheme?
The Employee Pension Scheme 1995 (EPS 95), which the Employees’ Provident Fund Organisation introduced on November 19, 1995, is a social security initiative intended to cater to the retirement needs of employees in the organised sector. Administered by the EPFO, this scheme guarantees pension benefits to eligible employees who reach the age of 58.
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EPS 95 is a part of the broader Employees’ Provident Fund and is applicable to both existing and new members. Under this scheme, a combined contribution of 12% of the employee’s salary, which includes the basic wage and dearness allowance, is made by the employer and the employee towards the EPF. While the employee’s entire share goes directly to the EPF each month, 8.33% of the employer’s contribution is designated for the Employees’ Pension Scheme, with the remaining 3.67% directed to the Employees’ Provident Fund.
Types of pensions
The EPS 95 pension scheme offers various types of pensions to provide support to family members of the pensioner, including pensions for widows, children, and orphans.
Widow Pension:
The Widow Pension, also referred to as Vridha Pension in the EPS 95 scheme, grants eligible widows a pension amount that is provided until the widow’s death or remarriage. When there are multiple widows, the pension amount is designated to the eldest widow.
Superannuation Pension:
A member is eligible for a superannuation pension upon completing 10 years of qualifying service and retiring at the age of 58 or above.
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Child Pension:
In addition to the Widow Pension, surviving children of the pensioner are eligible for Child Pension following the member’s passing. This monthly pension is paid until the child reaches 25 years of age, amounting to 25% of the widow’s pension. A maximum of two children can receive this pension benefit.
Orphan Pension:
The children of a deceased member are eligible to receive a monthly orphan pension amounting to 75% of the monthly widow pension value if the member passes away without a surviving widow. The orphan pension benefit extends to the two eldest surviving children.
Reduced Pension:
A member of the Employee Provident Fund Organisation (EPFO) has the option to withdraw an early pension if they have completed a minimum of 10 years of service and are between the ages of 50 and 58. The pension amount is reduced by 4% for each year the member is below the age of 58 when opting for early withdrawal. For instance, withdrawing the pension at the age of 54 would result in receiving 84% (100% – 4% x 4) of the original pension amount.
Eligibility
To avail the pension, individuals need to be members of EPFO.
To qualify for a service pension, an individual must serve a minimum of 10 years. The standard retirement age for a regular pension is 58 years; however, retiring earlier may still enable one to receive a pension at a reduced rate.
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Those willing to commence their pension from age 60 stand to benefit from an additional 4% increment annually. In scenarios where an individual has not fulfilled the full 10-year service requirement but has served a minimum of 6 months, they may withdraw their Employees’ Pension Scheme (EPS) amount if unemployed for over 2 months.
If an employee becomes totally and permanently disabled, they qualify for a monthly pension, irrespective of not completing the pensionable service period. Medical evaluations are conducted to verify the employee’s inability to fulfill job responsibilities due to the disability.
Furthermore, in the unfortunate event of an employee’s demise during service, their family members may be entitled to pension benefits.
Rules for EPF pension
1. Employees earning Rs 15,000 or less per month are required to enroll in this scheme.
2. Employers must contribute within 15 days of each month’s closure.
3. In the event of an employee’s passing, if the widowed spouse remarries, pension benefits will transfer to the children.
4. The employee’s contribution includes basic salary, dearness allowance, cash value of food concessions, and retaining allowance.
5. Transferring EPS online is possible through a composite claim form. Family members can claim EPS benefits by submitting various forms.
6. Form 10C is for withdrawal before completing 10 years of service, while Form 10D is for monthly pension withdrawal after reaching 50 years old.
7. To confirm the widow’s non-remarriage status, a Non-Remarriage certificate is required, and a life certificate is needed to verify the employee’s existence.
8. To access the accumulated amount in the EPS account, reference the EPF passbook available for download on the EPF passbook portal.
9. When transitioning between employment positions, it is necessary to complete Form 11 and Form 13 submissions.
10. If possessing an existing Universal Account Number (UAN) and utilising Aadhaar for verification within the EPF system, only Form 11 submission is required. Form 11 attests membership in the EPF scheme, while Form 13 facilitates the transfer of PF funds from the prior employer to the current one.
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Application forms
The Employees’ Provident Fund (EPF) pension scheme utilises several forms for different purposes:
Form 10C: Form 10C is utilized for withdrawing funds from the EPF account before completing 10 years of service. This form outlines the eligibility criteria, benefits, and required documentation for fund withdrawal.
Form 10D:Form 10D is used to initiate monthly pension withdrawals once an individual reaches 50 years of age. Additionally, this form is applicable for other pensions such as monthly widow pension, child pension, and more.
Form 9:Form 9 serves as an EPF declaration form that must be completed when seeking employment in a factory or any other establishment governed by the Employees Pension Scheme.
Life Certificate: Pensioners or nominees sign a form to declare that they are alive. This is submitted every November. The form is to be submitted to the bank manager.
Non-marriage certificate: This is filled to declared that the nominee (widow/widower) is not married again. This is also submitted every year in the month of November.
