Employees Pension Scheme (EPS): Types, Calculations & Claim Process

An employee working in an organised sector and registered under the Employees Provident Fund Organization is eligible to claim pension under Employees Pension Scheme after retirement. However, there are certain conditions to be fulfilled to claim a pension under the scheme. Let us look at the eligibility criteria to get retirement pension benefits under EPS:

1. The individual should be a registered member of EPFO.
   
2. He should have completed 10 years of service.
   
3. He should be 58 years of age or above at the time of retirement.
   
4. He should be at least 50 years to claim a pension at a lower rate.
   

Note that, in case the pension is not paid for two years or retirement is delayed till the age of 60 years, the individual is eligible to receive a pension at an additional rate of 4%.

Types of pension under EPS

There are different types of pensions that are available under the EPS. Following are the different types of pension your employer can provide:

1. Superannuation Pension

It is the pension an employee can claim monthly after retirement at the age of 58 years and after rendering eligible service of 10 years or more.

2. Disablement pension

This type of pension can be claimed early due to permanent and total disablement.

3. Reduced Pension

An employee who is 50 years is eligible to withdraw early pension at a reduced rate of 4% per annum. The member should be less than 58 years and should have contributed to EPF for at least 10 years. The individual receives a reduced pension till he reaches the age of 58 years.¹

4. Widow Pension

It is also called Vridha Pension. In case of the demise of an employee, his widow is eligible to claim a pension. The pension is payable until her death or remarriage. The amount payable monthly as pension to the widow is calculated according to Table C of EPS 1995¹.

5. Orphan Pension

In case of the death of an employee who does not have a surviving widow, his surviving children are eligible to receive a monthly pension under EPS. The orphaned children are entitled to 75% of the widow pension value.¹

6. Child Pension

In case of the demise of an employee, the surviving children are eligible to receive a monthly pension in addition to the widow pension. The monthly pension is paid till the child turns 25. In case of a disabled child, the pension is paid till the death of the child. The pension is paid to a maximum of 2 children and it is 25% of the widow pension value for each child.¹

7. Nominee Pension

The pension claimed by the nominee after the death of the employee if there are no family members.

8. Dependent Parent pension

Dependent parents are eligible to claim a pension in case an employee dies without a spouse and children or a nominee.

How is pension calculated under EPS?

The pension amount that an employee receives depends on the salary of the employee and the number of years of service. 8.33% of the employee’s salary is contributed by the employer. The formula for calculating the pension is:

EPS = (Pensionable Salary*Service period)/70

Where, Pensionable salary is the average monthly salary earned in the last 12 months before leaving the EPS plan.

Service period or pensionable service is the entire time you have worked, irrespective of the job changes. That means the total number of years an employee has worked for each employer is taken together as his service period.

How to claim pension under EPS ²

To claim a pension an employee needs to submit certain forms, which are;

1. Form 10(C) - It is needed if an employee wants to withdraw pension contributions before completing 10 years of service.

2. Form 10(D) - It is needed if an employee claims a monthly pension after completing 50 years or 58 years of rendering service for 10 years or more.

3. Life certificate - Every pensioner must submit a life certificate in November to certify that he is alive. This form is submitted to the branch manager of the bank having the pension account.

4. Non-remarriage certificate - This form is submitted by the surviving partner of the deceased member to certify that he or she has not remarried.

Online process of withdrawing pension

Here is the detailed process of withdrawing a pension online. The process is simple and will help you save time.

1. Visit the EPFO website
   
2. Login to the UAN member portal using your UAN and password.
   
3. Go to the menu bar and click on ‘online services’.
   
4. Choose the applicable form and you will see member details displayed on your screen.
   
5. Enter the last 4 digits of your account and verify.
   
6. Put your signature and proceed.
   
7. Select the pension withdrawal option you want
   
8. Select the Aadhaar OTP option
   
9. Enter the OTP received and validate
   
10. Submit the claim form

Pension withdrawal in different conditions

Pension withdrawals in different conditions require different forms to be submitted. Let us explore the different conditions and which forms are applicable in which condition.

1. Withdrawing pension before completing 10 years of service
To claim the PF amount and EPS amount, an employee needs to submit a composite claim form. In case the employee wishes to work again after a gap, he can submit form 10C to get a scheme certificate to retain the pension fund membership. The amount that an employee receives is based on the number of service years, as mentioned in the Table D-EPS scheme¹. Remember that a lump sum withdrawal is taxable.

2. Withdrawing pension after completing 10 years of service
Withdrawal benefit is not allowed for more than 10 years of eligible service, and only a scheme certificate is issued. You will get a pension only after the age of 58 years. You can claim the PF amount and scheme certificate using the composite claim form along with form 10C.

3. Withdrawing pension between the age of 50 and 58 years
For an employee between the age of 50 and 58 years who have completed 10 years of eligible service, an early pension and PF amount can be claimed using form 10D along with a composite claim form, or he can get a scheme certificate using form 10C.

4. Withdrawing pension after the age of 58 years
An employee can claim a pension easily after 58 years of age by submitting form 10D if they have contributed to EPF for 10 years. Once an employee is retired, an EPS pension scheme certificate is generated.

5. Withdrawing pension on absolute disablement
If an employee is permanently and totally disabled, he is eligible to receive a pension even if he has not served the minimum required service period. Their employer should deposit a minimum of 1 month’s pension into their EPF account for them to be eligible. He can claim monthly pensions from the date of disablement provided he provides a medical certificate stating that he is not fit to work due to disability.

6. Withdrawing EPS amount in case of a job change
In case an employee changes jobs, he needs to submit two forms: form 11 to certify that he is a member of the EPF scheme and form 13 to transfer the existing PF balance to a new PF account. For existing UAN with Aadhaar-validated KYC in the EPF database, a composite claim form is applicable for both functions through the EPFO portal.

Conclusion

It is always recommended not to withdraw your pension amount till you retire so that you can have a steady flow of income during your retired days. Withdrawing early will affect your interest and reduce your retirement corpus. Also, withdrawal before 10 years is subject to 10% TDS.