The Employees' Pension Scheme (EPS), often referred to as EPF Pension, is a social security scheme in India launched in 1995 and managed by the Employees' Provident Fund Organisation (EPFO). It aims to provide a monthly pension to employees in the organized sector after their retirement.
Eligibility:
- EPF Membership: Employees who are members of the Employees' Provident Fund (EPF) scheme are automatically enrolled in EPS.
- Service Period: A minimum of 10 years of eligible service is required to be eligible for pension benefits.
- Retirement Age: The regular pension starts at the age of 58.
- Early Pension: Members can opt for a reduced pension after attaining the age of 50, provided they have completed 10 years of service. The pension amount is reduced for each year it's drawn before 58.
Contribution:
- While both the employee and employer contribute 12% of the employee's basic salary and dearness allowance (DA) to the EPF, the EPS contribution works differently:
- The employee's entire 12% goes into the EPF account.
- From the employer's 12% contribution, 8.33% is directed towards the EPS (subject to a wage ceiling, currently ₹15,000 per month for calculation purposes, meaning a maximum of ₹1,250 per month goes to EPS for most employees). The remaining 3.67% of the employer's share goes to the EPF account.
- The Central Government also contributes 1.16% of the employee's pay (up to the current wage ceiling) to the Pension Fund for eligible members.
Pension Calculation:
The monthly pension amount is generally calculated using the following formula:
Monthly Pension = (Pensionable Salary × Pensionable Service) / 70
Where:
- Pensionable Salary: This is typically the average monthly salary (Basic Salary + Dearness Allowance) for the last 60 months (5 years) preceding the date of exit from the EPS. For the purpose of this calculation, the pensionable salary is currently capped at ₹15,000 per month for most employees, unless they have opted for and are eligible for a higher pension based on actual salary contributions.
- Pensionable Service: This is the total number of years the employee has contributed to the EPS.
- Service for 6 months or more is rounded off to one year.
- Service less than 6 months is not counted.
- A bonus of 2 years is added to the pensionable service if the member has completed 20 years or more of eligible service. However, the maximum pensionable service used for calculation is generally capped at 35 years.
Minimum Pension:
There is a provision for a minimum monthly pension of ₹1,000.
Types of Pension:
Besides the regular member pension, EPS also provides for:
- Widow/Widower Pension
- Child Pension (up to two children, until age 25)
- Orphan Pension
- Disabled Child Pension (lifelong)
Important Note: This calculator provides an estimate. The actual pension amount is determined by EPFO based on official records and rules at the time of claim.