Can every EPF subscriber claim pension after retirement? Rules explained

To help salaried employees build a retirement corpus, the government runs the Employees' Provident Fund (EPF) scheme, under which both the employee contributes 12% of their basic salary and dearness allowance (DA), while the employer makes a matching contribution. But, the the employer's share is split between the EPF account and the Employees' Pension Scheme (EPS).

Under EPS-1995, eligible EPF subscribers can receive monthly pensions benefits post retirement, subject to certain conditions such as minimum years or service and age criteria. Here's a look at who qualifies for EPS pension and the key rules subscribers should know.

What is eligible EPS?

EPS is a social security scheme provided by the Employees’ Provident Fund Organisation (EPFO). The scheme makes provisions for employees working in the organized sector for a pension after their retirement. To receive EPS pension benefits, a member meet these criteria:

• Must be a member of the EPF scheme.
• Must complete at least 10 years of service ( this does not have to be continuous service).
• Must attain 58 years of age to claim regular pension.
• Can opt for early pension after attaining 50 years of age and 10 years of eligible service but the amount will be reduced.

Although most eligible employees are automatically enrolled in the EPS along with EPF, certain subscribers may not be covered under the pension scheme. This could be due to factors such as their salary exceeding the prescribed threshold at the time of joining or opting for the joint option for higher pension contributions.

According to EPFO, if you joined employment after 1 September 2014 with a basic salary of more than ₹15,000 per month, the entire 12% of employer contribution will go into EPF. You will not become an EPS member. Subscribers must also know that the minimum monthly pension amount that the individual shall receive is ₹1,000, according to Paisabazaar.

Who contributes towards EPS?

For eligible EPS members, 8.33% out of the employer’s 12% EPF contribution is allocated towards the pension scheme, while the remaining portion is credited to the employee’s EPF account.

Withdrawal rules for pension

The process for withdrawing or claiming EPS benefits depends on the employee’s years of service. A subscriber must know the following rules:

• If the pensionable service is between six months and 10 years, the member can withdraw the pension amount as a lump sum by submitting Form 10C.
• If the member has completed 10 years or more of service, EPS benefits can be claimed only as a monthly pension after attaining 58 years of age, for which Form 10D must be submitted to the EPFO.
• In cases where the member opts for reduced pension the age of 58 after completing 10 years of service, Form 10D is required.

Eligible service refers to the total period for which contributions under the EPS-1995 have been received or are payable for a member.

How to check your EPS balance

A member can check the amount accumulated in EPS account by looking through their EPF Passbook. The last column in the passbook shows the EPS contribution deposited by the employer every month in the account of the member.

The passbook can be downloaded from the EPF Passbook portal after logging into the account using UAN and password.

The pension amount in EPS depends on the pensionable salary of the member and the pensionable service. The member’s monthly pension amount is calculated as per the following EPS formula: Member’s Monthly Pension = Pensionable salary X Pensionable service / 70.

For example, if a person's pensionable salary is ₹15,000 and the pensionable service is 25 years and they use the above formula, their monthly pension works out to be around ₹5,357 per month.