The pension amount under EPS is determined on the basis of the length of service of the employee and the average salary earned in the last 12 months preceding the date of exit from employment.
EPS is managed by the Employees’ Pension Fund Organization
Employees’ Pension Scheme (EPS) is a retirement benefit scheme that is part of the Employees’ Provident Fund (EPF) system in India. It is designed to provide pension benefits to employees who have contributed to EPF for at least 10 years. Its objective is to provide financial security to the employees after their retirement or in the event of their death or disability.
EPS is managed by the Employees’ Pension Fund Organization (EPFO), which recently issued a circular asking eligible employees and pensioners to transfer funds from their EPF account to EPS account within three months. Written consent has to be given.
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Under EPS, both the employer and the employee contribute a certain percentage of the employee’s salary to the pension fund. The employer contributes 8.33 per cent of the employee’s salary, up to a maximum of Rs 1,250 per month, while the employee contributes 12 per cent of his salary towards the EPF, with the entire employee’s contribution going to the EPF and the employer’s share. The contribution is going towards EPS. The pension amount under EPS is determined on the basis of the length of service of the employee and the average salary earned in the last 12 months preceding the date of exit from employment.
Now, with regard to the question of exit after applying for higher EPS pension, it is important to note that once an employee has applied for EPS pension, they cannot exit or withdraw from the scheme Are.
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Experts have said that applying for higher EPS pension requires written consent for diversion or deposit of funds. But this cannot be considered as an exit window, as there is no clarity from the EPFO.
EPS is a lifelong benefit given to pension eligible employees. So once the pension starts, it continues till the death of the pensioner and is then transferred to the spouse or dependent children as family pension. Hence it is not possible to exit from EPS after applying for higher pension.
On the other hand, EPS provides an option to commute a part of the pension amount, wherein instead of regular monthly pension, a lump sum amount can be withdrawn. But this conversion option comes with certain restrictions and is subject to specific conditions and calculations only.