The Employees’ Provident Fund is familiar territory for most of the salaried employees, but the Employees’ Pension Scheme that is inside is not. Every month, some part of the EPF contribution is moved to EPS. This is a poll that makes it a monthly pension after retirement. The PF balance, which you can see in your passbook and which earns interest every year, works under fixed rules set. All ot this is driven by formulas, security years, and wage ceilings, not by the market returns. The changes in EPFO notifications over the years, the wage caps, and court orders have added complexity. This makes more harder for people to understand what they will receive.
How do you qualify for a pension under EPS?
The employee must complete at least 10 years of pensionable service as long as they reach the age of 58 to receive a lifetime monthly pension. “Pensionable service” refers to the total number of years during which contributions have been made to the Employees’ Pension Scheme (EPS) across all your employers, provided you have transferred your PF and not withdrawn it.
You have the option to begin receiving your pension at age 50; however, this is considered an early pension, and the amount will be permanently reduced by a fixed factor. Alternatively, you can defer your pension beyond age 58, up to 60, to receive a slightly higher monthly benefit.
If you leave the service before completing 10 years under EPS, the employee will not be eligible for a monthly pension. You will be entitled to one one-time withdrawal benefit. This is a small lump sum calculated using a table service issued by EFPO. The pension amount is calculated by applying a factor based on your completed years of service and multiplying it by your pensionable salary.
For employees who joined the EPF after the mid-1990s, EPS membership is automatic, provided their wages fall within the statutory limits. Typically, new members are covered up to the current EPS wage ceiling, unless they are enrolled in the higher pension scheme, which has separate eligibility conditions.
How to calculate PF each month
Breakdown of PF contributions toward EPS: Each month, 12% of your basic salary (plus eligible allowances) is contributed to your EPF account. This full 12% is your personal contribution and is credited to your PF. Your employer also contributes 12%, but not all of it is directed to EPS in the same way.
What happens if you leave before 10 years
A lot of employees switch jobs frequently, have career gaps, or more abroad and withdraw their PF instead of transferring it. This has a direct impact on eligibility. If you leave your job before completing 10 years and withdraw your PF for that period, your EPS membership for those years ends as well. In this case, you will receive a one-time EPS withdrawal benefit instead of a regular monthly pension in the future.
How EPS safeguards your family
The Employees’ Pension Scheme (EPS) offers more than just a retirement pension. It includes family and survivor benefits. If a member passes away while in service and meets the minimum required years of service, the scheme ensures a family pension is provided to the spouse and eligible children.
