About Employee Pension Scheme (EPS)
Updated On Nov 27, 2021
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Financial advisors have emphasised the need of establishing financial independence at a young age for individuals, especially for young business professionals in their twenties. Early retirement necessitates financial independence, and the two goals are inextricably linked. As a result, if one does not achieve financial independence in a timely manner, it is impossible to retire early.
Employees' Pension Scheme (EPS), sometimes known as EPF Pension, is a social security scheme administered by the Employees' Provident Fund Organisation (EPFO). Employees in the organised sector are eligible for a pension once they retire at the age of 58 years under the system. To find out more on the employee pension schemes, read on.
Benefits Under Employee Pension Scheme (EPS)
Following are some of the benefits that an individual can avail under EPS -
Pension For Retirement At 58 Years
When a member retires at the age of 58, they become eligible for pension payments. However, when they reach the age of 58 years, they must have served for at least 10 years in order to be eligible for pension payments. An EPS Scheme Certificate is created, which may be used to complete Form 10D for monthly pension withdrawal.
Service Requirements For Pension
If a member is unable to stay in service for 10 years before reaching the age of 58, they may withdraw the entire amount by completing Form 10C at the age of 58. It's worth noting that they won't be receiving monthly pension payments once they retire.
Regardless of whether or whether an individual has served the pensionable service time, an EPFO member who becomes completely and permanently incapacitated is entitled to a monthly pension. To be eligible for the pension, their employer must deposit funds in his EPS account for at least one month.
From the date of permanent disability, the member is eligible for a monthly pension, which is paid for the rest of their life. However, the member may be required to undergo a medical examination to determine whether or not they are unsuited for the work they were performing before being incapacitated.
Employee Pension Scheme (EPS) Eligibility
Following is the listed eligibility criteria for an individual to avail EPS benefits -
1. An employee should be a member of EPFO.
2. An employee must be at least 50 years old in order to avail the benefit of an early pension and 58 years old for a regular pension.
3. In case an individual delays their pension for 2 years (until they reach the age of 60), they will be able to earn a 4 percent annual increase in their pension.
4. They must have served for a minimum tenure of 10 years.
Features Of Employee Pension Scheme (EPS)
Following are some features of EPS -
1. As EPS is backed by the Indian government, the profits are guaranteed, and investing in the plan carries no risk. The amount that will be reimbursed will be fixed and cannot be changed.
2. Employees earning a base salary plus DA of Rs.15,000 or less are required to enrol in the plan.
3. Once an individual reaches the age of 50, they will be entitled to withdraw their EPS. However, the money an individual gets will be at a lower interest rate.
4. If the widower/widow remarries, the children will be classified as orphans and would get the additional pension amount.
5. Employees enrolled under the EPF scheme will automatically get enrolled for the EPS scheme.
6. An individual would earn a minimum monthly pension of Rs.1,000.
7. If the widow or widower is getting an EPS payment, they will continue to receive it until they die. After that, the children of the respective individual will get the pension amount until they reach the age of 25.
8. If the kid of the respective employee is physically challenged, the pension amount will be paid to them until the kid dies.
Retirement is a huge milestone in any individual's life, and in order to properly navigate it, they must accept the fact that they will leave one day and that they will only have a limited compensation source that will also vanish one day. In a way, this will encourage individuals to prepare and plan for their retirement.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.