EPS Full Form is Employee Pension Scheme.
Employee Pension Scheme is a plan or a scheme governed by the Employees’ Provident Fund Organisation (EPFO), to guard the financial security of the employees. Employees in the organized sector are eligible for a pension once they retire at the age of 58 years under the program. Employees may be able to earn a guaranteed pension for the rest of their lives if they participate in this program
EPS Enrolment Process
When the employees are enrolled in the Employees Provident Fund Organisation (EPFO), they also become eligible for the Employee Pension Scheme. Once you’ve enrolled in the EPF, your employer contributes 12% of your salary plus the dearness allowance to your retirement fund each month, with your employer matching your payment.
Relation Between EPS and your Salary Ceiling
The EPS payment made on your behalf by both your company and the government is, however, subject to a salary ceiling. Until September 2014, the highest wage for EPS would accept employer contributions was INR 6,500 per month. In September 2014, the EPS regulations were drastically changed, the wage ceiling was raised to INR 15,000 per month. This implies that regardless of your income, the amount of money deposited into the EPS kitty on your behalf each month is capped at INR 1,250 (8.33 percent of actual salary).
Formula for Calculating the EPS Pension
Previously, EPFO provided an Employee Pension Scheme based on the employee’s pay, with an utmost ceiling of INR 15,000 per year. After the amendments made in the laws, now the EPS contribution is computed by 8.33% of employees’ actual salary.
EPS Minimum Pension
The minimal monthly pension that a person would get via the Employee Pension Scheme after retirement is now Rs. 1,000. The Union, on the other hand, has long demanded that the government raise this ceiling to Rs. 5,000 per month.
Maximum EPS Pension
The maximum pension that may be earned through EPS is INR 7,500.
Eligiblity Critera for the Employee Pension Scheme Program?
- Be a member of EPFO
The first criteria are to become a member of the EPFO.
- Ten years of working at least
Complete at least ten years of active service and an equivalent number of years of active offerings towards the EPF pension plan.
- Eligibility Age of Employee Pension Scheme
You must be at least 58 years old. To withdraw from the Employee Pension Scheme pension at a reduced rate, you must be at least 50 years old.
How Much Would My Pension Be?
What is a reasonable amount for a pension? Some financial advisors propose that by the time you retire, you have saved 10 times your typical working-life wage. In simple words, your pension funds are in proportion to your pensionable salary and your pensionable service.
Calculation of Pension by using the EPS formula:
- Your Monthly Salary = Pensionable salary * Pensionable service / 70
For example, if your monthly payment is INR 30,000, you should aim for a pension fund of INR 300,000. Another important piece of advice is to set aside 12.5% of your monthly paycheck.
- Pensionable Salary: If your monthly pay is 30,000, and the employer contributions are 8.33% of your salary, the amount in your EPS account would be calculated by-
- ₹ 30000 x 8.33/100 = ₹ 2499
- Pensionable Service: Pensionable service is calculated on your actual service period. Whenever the employee switches their job, the EPS certificate has to be submitted. It is to be noted that, the employee has the right to get a bonus of two years on completion of twenty years of working.
How Can I Obtain a Certificate from The Employee Pension Scheme?
Once you have left your work, you must complete Form 10C.
There are two alternatives on form 10C:
- Withdraw EPS
- Apply for an EPS Scheme Certificate.
After you choose the choices for issuing an EPS Scheme Certificate, your employer transmits the information to EPFO, which subsequently issues you an EPS Scheme Certificate.
How Can I Ensure a Steady Monthly Income Once I Retire?
After the government’s guaranteed pension program was phased away, most people faced a perplexing financial dilemma. The EPS plan of 1995, on the other hand, is a haven and acts as financial security. Employees with many years of service might benefit from this program, which provides a modest but guaranteed stipend.