Employee Pension Scheme

Employee Pension Scheme

The purpose of the scheme is to provide for superannuating pension, retiring pension or permanent total disablement pension to the employees. Widow or widowers pension, children pension or orphan pension payable to the beneficiaries employees. Salient Features of the Employees Pension Scheme 1995 (EPS-95). This scheme is applicable to all members who are covered under Provident Fund Act after 15.11.1995 It replaces the previous Employees Family Scheme 1971 If member is alive, pension to member If member is not alive, Pension to spouse and two children below 25 years of age

Applicable to all PF subscribers including exempted establishments contributing to EPS Scheme.

Funding of the Pension Scheme

An amount equal to 8.33% of pay or Rs 541/- ( whichever is lesser) is pooled into the EPS from the Employer's contribution. Example:- If a PF member gets Rs. 1000/- as monthly wages and he and his employer contributes

12% each (Total of Rs. 240)

Rs. 120 + Rs.37 =157 goes to Provident Fund and Rs. 83 goes to Pension Fund. The Central Government will also contribute at 1.16 % of the pay of the member.
Pay" means basic wages, with dearness allowance, retaining allowance and cash value of food concessions

admissible, if any

Eligibility to under EPS scheme

Minimum 10 years eligible service will entitle for member pension. The aggregate of actual service and the 'past service' shall be treated as eligible service. The fraction of service for six months or more shall be treated as one year and the service less than six months shall be ignored.

Calculation of Pension
Monthly Member Pension:Pensionable Salary X Pensionable Service 70 Maximum Pensionable service for the calculation of service is 35 yrs. If a member has maximum service, pension will be: Pensionable Salary 2
* Pensionable Salary - it means the average salary of the member drawn during the last 12 months.The maximum limit of pensionable salary is Rs. 6500/-PM. i.e. If an employee received Rs. 10,000/- PM as basic salary, for the purpose of calculating pension under FPS, the basic salary is considered to be Rs. 6500/- PM * Pensionable Service it means service of the member for which contribution for the pension fund is made. In the case of the member who superannuates on attaining the age of 58 years, and/or who has rendered 20 years pensionable service or more, his pensionable service shall be increased by adding a weightage of 2 years.

Those who joined BEFORE 15.11.1995 ( pension is also payable for membership period under ceased FPS71 as past service benefit based on factor formula of table & schedule B)

Types of Monthly Pension

Member Pension:- On superannuation / Retirement/ Short service. Disablement Pension:- On permanent and total disablement during employment Widow Pension:- After death in service or death after retirement of the member from the company. (50% of monthly members pension subject to a minimum of Rs. 250/- PM) Children Pension:- After death in service or death after retirement of the member from the company, children pension is given two children (25% of the widow pension subject to a minimum
of Rs. 115/- PM) in addition to widow pension. If there is no widow pension, children are

entitled for orphan pension ( 75% of widow pension subject to a minimum of Rs. 170/-PM) Return of Capital :- Reduced pension and avail of return of capital under any three alternatives given in the page ( slide number 10) . Nominee Pension:- upon death of the members having no family, pension will paid to the nominee (Equal to that of widow pension )

Monthly member Pension Eligibility

Superannuation Pension If age is 58 years or more

20 years or more service

Retirement Pensions If age is between 50 and 58 years 20 years or more service

Short Service Pension

10 to 20 years of service Disability Pension Permanently and totally unfit for the employment which the member was doing at the time of such disablement . Membership with one months contribution to the pension fund is enough. Quantum of pension as per pension formula subject to minimum Rs. 250/- PM

Monthly member Pension Calculation

If the member completes 20 years, the Monthly Member Pension Pensionable Salary X Pensionable Service 70 If the member completes less than 20 years, the monthly member pension The amount arrived as per the above formula, shall be reduced at the rate of 6% for every year by which the eligible service falls short of 20 years, subject to a maximum reduction of 25%

The member can continue in service while receiving this pension On attaining 58 Years of age, a EPF member cease to be a member of EPS automatically The member need not be in service if he completes 10 years service in FPS

Family Pension - Eligibility

Situation I -

Death of the member/ Death while in service :-(Widow Pension & Children Pension/ Orphan Pension/ Nominee Pension)
Member should complete at least one month's service

If unmarried, pension to nominee or to dependent parent is payable without any

other conditions . In this case children pension / orphan pension is payable to maximum of 2 children upto 25 years. ( In case more than two children the eligibility of pension will run

from the eldest to the younger child in order).

Family Pension - Eligibility

Situation II Death of the member Death when NOT in service:-(Widow Pension &Children Pension /

Orphan Pension/ Nominee Pension)

If a member dies even when not in service, holding a valid scheme certificate and not completed 58 years of age. If unmarried, pension to nominee or to dependent parent is payable only when the member has rendered 10 years of service

Situation III Death of the employee While getting Pension from FPS :-(Widow Pension &Children Pension / Orphan Pension/ Nominee Pension)
Widow Pension - 50% of the monthly member pension subject to minimum Rs. 250 /- PM Children Pension - 25% of the monthly member pension to each children (maximum number 2) upto attaining 25 years of age. Nominee Pension - Equal that of widow pension.

Options for Return of Capital

The employee is eligible to pension may opt to draw for reduced pension and avail of return of capital under any one of the three alternatives given below.
Alternative 1
Revised pension during life time of member with return of capital on his death.

Alternative 2
Revised pension during life time of member, further reduced pension during life time of the widow or her remarriage whichever is earlier and return of capital on widows death / remarriage

Alternative 3
Pension for a fixed period of 20 years not with standing whether the member lives for that period or not

Example of Calculation
Date of Birth Completed 58 Years on : 31.1.1947 :- 31.1.2005

Age as on 16.11.95
FPF Membership EPS 95 Membership

:- 48 years
:- 18 Years ( assumed membership of FPF w.e.f 1977) :- 10 Years

Pay as on 16.11.95
Past service benefit

:- above Rs 2500/:- Rs. 135 X 5.301 = Rs.715.635

(Factor formula of table & schedule B of the previous EFPS - 1971)

Pension payable : =Rs. 715.635 + ( Rs.6500 X10/70)

= Rs. 715.635+ Rs.928.57 = Rs.1644.205

Example of Calculation
Date of Birth Completed 58 Years on :- 11.7.1951 :- 10.7.2009

Age as on 16.11.95
FPF Membership EPS 95 Membership

:- 34years
:- 15 Years ( assumed membership of FPF w.e.f 1980)
:-

13 Years

Pay as on 16.11.95
Past service benefit Pension payable

:- above Rs 2500/:- Rs. 105 X 3.292 = Rs.345.66

(Factor formula of table & schedule B of the previous EFPS - 1971)

=Rs. 345.66 + ( Rs.6500 X13/70) = Rs. 345.66+ Rs.1207.14 = Rs.1552.80

Schedule B of the previous EFPS - 1971

(n) (1) Less than 1 Less than 2 Less than 3 Less than 4 Less than 5 Less than 6 Less than 7 Less than 8 Less than 9 Less than 10 Less than 11 Less than 12

FACTOR (2) 1.049 1.154 1.269 1.396 1.536 1.689 1.858 2.044 2.248 2.473 2.72 2.992

(n) (1) Less than 13 Less than 14 Less than 15 Less than 16 Less than 17 Less than 18 Less than 19 Less than 20 Less than 21 Less than 22 Less than 23 Less than 24

FACTOR (2) 3.292 3.621 3.983 4.381 4.819 5.301 5.81 6.414 7.056 7.761 8.537 9.39

The End