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Friday, February 13, 2015

Working in private sector? Your pension (EPS) is getting accumulated.


[Last Update : 11-Jul-2017]

In a recent survey by a leading financial magazine, it came out that almost 60% of the respondents were unaware that private-sector employees covered by the employee Provident Fund (EPF), are also eligible for lifelong pension. More than 30% of these unaware respondents had already contributed Rs. 65,000-1 lakh of their hard earned money to the Employees' Pension Scheme (EPS) till now. Want to understand about this EPS pension scheme?...read on...

Employees’ Pension Scheme (EPS) 
'Provident' word in English dictionary means "timely preparation for the future". There are so many provident funds being talked about that I myself get confused when people used to ask me about Employee Provident Fund and Pension and Gratuity and Superannuation. Here, we are going to get a deeper understanding of the EPS (Employee Pension Scheme)

What is Employees’ Pension Scheme (EPS)
If you are a working professional, then 12% contribution from your side (12% of your basic salary) goes to your Employee Provident Fund (EPF), but the 12% contribution which your employer makes does not go fully into your EPF account.

Out of the employer's total contribution, a small 8.33% actually goes in Employees’ Pension Scheme (EPS) (subject to a maximum of Rs 1250) and the rest goes into EPF. Please note that vide notification dated 22.08.2014, Ministry of Labour and Employment has increased  Employee Provident Fund (EPF) from Rs. 541 ceiling to Rs. 1250 ceiling.

But there is much more to Employee Pension Scheme such as how much pension can one get? Does EPS portion earn any interest? When can you withdraw and how much amount etc? We must understand all these in more detail to take more informed decisions in life.

Main features of EPS
Employees’ Pension Scheme (EPS) of 1995 offers pension on disablement, widow pension, and pension for nominees. EPS program replaced the Family Pension Scheme (FPS) of 1971. When an employee joins an establishment covered under the Employees Provident Funds & Miscellaneous Provision Act, 1952 (s)he becomes a member of Employees Provident Fund Scheme (EPF) as well as Employees’ Pension Scheme (EPS) 1995.
  • EPS fund is financed by diverting 8.33% of employer’s monthly contribution from the EPF. 
  • Monthly contribution to EPS is restricted to 8.33% of Rs. 15000/- or Rs 1250 p.m. 
  • From September 1, 2014, the EPS is applicable only for those "new" members earning less than Rs 15,000. Therefore, new employees whose basic pay is more than Rs 15,000 will not see any diversion of 8.33 per cent (of the employer's share) towards the EPS. For older employees, the diversion will, however, continue. 
  • Unlike the EPF contribution, EPS part (8.33% out of 12% contribution from your employer or Rs 1250 pm whatever is minimum) does NOT get any interest.
  • 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. So 9 years and 6 months will be rounded up to 10 years.
  • Lifelong pension is available to the member and upon his death members of the family are entitled for the pension.
  • An employee can start receiving the pension under EPS only after rendering a minimum service of 10 years and attaining the age of 58 or 50 years (50 years pension being termed as Early pension).
  • No pension is payable before the age of 50 years.
  • Early pension can be claimed after 50 years but before the age of 58 years. But it is subject to discounting factors for every year falling short of 58 years. In case of death / disablement, the above restrictions don’t apply.
  • The limit on Pension is subject to maximum of Rs 7,500 per month.
  •  Maximum service for the calculation of service is 35 years.
  •  No pensioner can receive more than one EPF Pension.

When can an employee start receiving a Pension?
An employee can start receiving the pension under EPS only after rendering a minimum service of 10 years and attaining the age of 58 or 50 years. However, no pension is payable before the age of 50 years and early pension after 50 years but before the age of 58 years is subject to discounting factor for every year falling short of 58 years. In case of death / disablement, the above restrictions doesn't apply.

What happens between 50 and 58 years?
You can opt for pension after 50 but will have to forgo 4% for every year before you turn 58.

What is the formula for calculating the monthly pension?
Under Employees’ Pension Scheme, the monthly retiring pension is decided on the basis of ‘Pensionable Service’ and ‘Pensionable Salary’ and is worked out as follows:
Monthly pension = ( Pensionable salary*Pensionable service)/70
where:
Pensionable Salary is arrived as the average of 60 months last drawn salary instead of earlier rule of last 12 months average salary. If someone is going to retire after 3 years with Rs. 15,000/- pensionable salary, and was working with Rs. 6,500/- pensionable salary earlier, then the pensionable salary calculation would be : 
(Rs. 15,000*3 + Rs. 6,500*2 )/5 = Rs. 11,600/- 
Pensionable Service is the service in years rendered by the member for which contributions have been received. Maximum service cannot exceed 35 years.

What is the maximum amount of Pension available under EPS?
Based on a maximum employment period of 35 years, and maximum contribution of Rs 15000, the maximum amount of pension as per the Pension formula would be = 15000 * 35/70 = Rs 7,500 per month or  Rs. 90,000(7500 * 12) per year.

Is the Monthly Pension paid under EPS justified?
The amount of pension is meager. If one would have invested Rs 1250 pm in a recurring deposit at the rate of 8% for 35 years, one would get 12,49,263/- as maturity amount. If this maturity amount is put in buying the Pension plan, say LIC’s Jeevan Akshay VI and put the above amount Rs 26,61,361/- in the premium calculator of LIC with option as Annuity payable for life, one would get monthly pension of approx Rs 25,000 pm which is much more than Rs 7,500 pm.

What Happens if you resign before completing 10 years of service?
If you resign before completing 9 years and 6 months of service, you get the “withdrawal benefit” which depends on your monthly salary and the no. of years of service. EPS always rounds up the number of years. So, if you worked for 4 years and 7 months, you will be considered as 5 years. 
You can opt for the withdrawal option only if you are less than 50 years old.

No. of Years of Service Multiplication Factor
1                                 1.02
2                                 1.99
3                                 2.98
4                                 3.99
5                                 5.02
6                                 6.07
7                                 7.13
8                                 8.22
9                                9.33
Note: The amount you will receive is not based on the balance in your EPS corpus. It is based on your basic salary and no. of years of service that can be considered after rounding up as per the table above.
For Ex: An employee exits from employment after 3 years and 8 months of service with a basic salary on exit Rs. 5,000 - then they will get Rs. 19,250 (5000 * 3.99)

If you have crossed the 50 year mark or the 10 years of service then this withdrawal option is not available for you. 

Are EPF and EPS linked?
Technically, EPS and EPF are not linked . You can withdraw the EPF once you leave the organization after filling Form 19. In case of EPS, if the service period is less than 10 years, you’ve option to either withdraw your corpus or get it transferred by obtaining a ‘Scheme Certificate’. Once, the service period crosses 10 years, the withdrawal option ceases.

For pension, withdrawal benefit, scheme certificate etc. application should be through ex-employer. For pension, Form 10D(pdf format) is to be used. For withdrawal benefit & scheme certificate, fill Form 10 C

Does EPS get transferred with EPF on change of Jobs?
Technically, the answer is yes. Both EPS and EPF get transferred together by filling in Form 13. Both the accounts may be separate but the custodian of EPS and EPF fund is a single organisation, which is EPFO. In fact, if you download your latest passbook from EPFO website (http://memberclaims.epfoservices.in/request_account_transfer.php), you will see a single statement with three different columns - one for EPF your contribution, 2nd for EPF employee contribution and 3rd for pension.
Actually, here is what happens. Pension benefit is calculated with formula as shown above. If you look at the formula, note that it is fully dependent on length of service of subscriber and last average wages on which pension contribution is made. Hence total contribution in EPS is sort of not relevant and also no accounting done like EPF contribution.
When Transferring PF amount the service details information viz length of service, non-contributory period, last wages drawn etc are transferred along with PF details and PF amount for information of receiving office in Annexure-K  to calculate pension benefits correctly. so, the accumulated Pension amount has no real relevance because the calculation of EPS Pension would be done again during resignation or retirement.

What is "Scheme Certificate"?

If you decide "not to withdraw" your pension or you are "not eligible to withdraw" your pension (if you have served 10+ years), and if you are less than 58 years of age, you have a choice to apply for a "Pension Certificate", also called as a "Scheme Certificate" instead of starting to get pension immediately. 
You can then claim your pension starting at the age of 58 years. 
The benefit of this certificate (instead of starting your pension) is that in case of a mishappening with you before attaining the age of 58 years, your family can claim a lifelong pension.

Grievance
If you have a complaint to be raised against EPFO, you can raise a grievance online by clicking here
If you do not get a satisfactory response to your online grievance, you may try connecting any of the EPFO officers via phone as given in the link here.
If this also does not help, it is better to pay a visit to their regional office and put up your case.

Reference Document
Click here to access the formal EPS document from the EPFO office, which lists all the rules. For withdrawal benefit, read Para 14 (Page 19) and refer to Table D (Page 51)


Summary
In nutshell, being aware of what your EPS corpus is, and how is it growing, you can have better planning of your financial freedom. However, looking at the meager returns, it is no way to be relied for your post freedom income.


126 comments:

  1. Very informative Sir, my husband is a private farm employee.I will make him to read this article.He has an idea that some pension will be paid to him after retirement but not aware of the procedure.But it is sad to know that maximum pension amount is only 7500/-.And in comparison to LIC Jeevan Akshay it very negligible amount.Our government should know about this difference.Thank you Sir

    ReplyDelete
    Replies
    1. Excellent article with information. Appreciated sir

      Is there any calculator for this

      Delete
    2. Thanks Kalpras. Are you looking for a pension calculator?
      Regards
      Manoj

      Delete
  2. This comment has been removed by a blog administrator.

    ReplyDelete
  3. This comment has been removed by a blog administrator.

    ReplyDelete
  4. This comment has been removed by a blog administrator.

    ReplyDelete
  5. I have a query regarding EPS. I joined NTPC - PSU on Aug 2011 and since the company is contributing Rs. 541 to my EPs account which was eventually increased to Rs1250. I wish to exit from the EPS-95 scheme so that all 12% contribution from my employer goes to PF account. I have read that i can withdraw from EPS-95 and take withdrawal benefit if contribution period is less than 9yr6months. But most of it stated it is possible after leaving job. I wanted to know if it i possible to withdraw from EPS95 without leaving job and get the withdrawal benefit

    ReplyDelete
    Replies
    1. Hello Reader,
      Just like contribution to EPF is mandatory, contribution to EPS is also mandatory and cannot be done away with. The 'withdrawal advantage' is only feasible if your contribution period is less than 9 years 6 months, and since the EPS contribution is mandatory while in a job, it is possible to withdraw only if you quit working within the stipulated time period, else you have no choice but to receive the paltry pension..Sad but true.
      Hope that helped.

      Cheers

      Manoj Arora
      www.manoj-arora.com

      Delete
  6. I had worked in a Private Partnership firm from 1981 to 1996. I have received the portion of Provident fund from Regional Provident Fund Office at Kolkata. I have not claim the Family Pension. May I Claim it now ?

    ReplyDelete
    Replies
    1. Dear Mr Mohan Lal
      Yes, please do so now.

      Cheers
      Manoj

      Delete
    2. dear Sir,

      is the EPS scheme compulsory for all the employers?

      if so should i request my previous employer to provide me my EPS number or scheme certificate!

      Please help .

      regards,
      Upendra Dhegaskar
      9769398089

      Delete
    3. Dear Upendra
      Yes, a part of your EPF contribution is mandatorily saved as EPS. If you have got your EPF transferred from the previous employer, then EPS details would also have got transferred along with that.
      Regards
      Manoj

      Delete
  7. This comment has been removed by a blog administrator.

    ReplyDelete
  8. Hi Sir,

    I was working with private organisation Vodafone for last 2 year 2 month. prior to Vodafone I had continued service from Nokia and Ericsson for 2 Year 11 month and 7 month respectively.

    So total i have 5 year 8 month continue service and my all PF transferred from one account to other successfully while switching Job. Now I am working in USA so i have withdrawn my all PF And EPS amount.

    Now I have received entire PF amount correctly but towards EPS i only received INR 24186.
    My last basic salary was 21124 INR.

    If I do roughly calculation from your article than ideally i should get (21124*6.07) for 6 years service.

    Then why they have given me only 24186. If i Count the money deducted towards EPS then even that doesnt come 24186.

    Kindly suggest.

    ReplyDelete
    Replies
    1. Dear Khushwant
      Your points are valid. You should seek EPS statement from EPFO or your last company. The statement should clearly depict the calculation behind the money that's paid to you.
      Only after looking at the statement can we comment on the gap.
      Regards
      Manoj Arora

      Delete
  9. Hi Manoj ji,

    Minimum period of 10 years service should be with one organization or can be with multiple organisations also by continuing the PF fund(Now with UAN number)

    ReplyDelete
    Replies
    1. Dear Raghavendra
      Since this pension fund is getting accumulated as a separate entity, but within the same UAN, this period of 10 years service can be in different companies as long as the UAN number remains the same.
      Join us for FREE on WhatsApp to get instant responses(http://manojarora.netfirms.com/cgi-bin/MA/images/whatsapp_2Steps.png)

      Regards
      Manoj

      Delete
  10. Dear sir kindly suggest me how to enter pension scheme for private company.

    ReplyDelete
    Replies
    1. Dear friend,
      If you and your company are contributing to Provident Fund (also called Employee Provident Fund or EPF), your pension is also automatically getting accumulated. Now, it is a different matter that this amount may too small for you to be much meaningful in life later on.
      If you want to build a healthier pension, one of the options for you is contributing towards NPS (National Pension Scheme).
      Other way is to increase your EPF contribution.
      If you have time in your hands, you can opt for Mutual Fund route as well. Start an SIP today and after your retirement, start a SWP (Systematic Withdrawal Plan).
      You can read about all of them in this blog itself, my friend.
      We would also recommend you to join us for FREE on WhatsApp to get instant responses(http://manojarora.netfirms.com/cgi-bin/MA/images/whatsapp_2Steps.png)
      Cheers
      Manoj

      Delete
    2. Please help me

      Delete
  11. Sir my father worked more than 12 years in a private concern. After due to losses company suddenly fired out the staff without notice. What about his pension amt and claim. His basic salary was 13000/- and he is of 1954 born. Kindly guidr us if he can avail even a little amt of monthly pension to kerp his life move on as now his without work and got paralysed years ago when he was an employer of another concern. Kindly reply

    ReplyDelete
  12. In total he worked about 33years with numerous private concerns and there was a deduction for epf esi fund

    ReplyDelete
    Replies
    1. Dear Puja
      Apologies for such delay in responding.
      Pension is accumulated with the epfo and has nothing to do with the company.
      Your father should be able to apply with epfo and get his pension. I am sure you would have already worked it out by now

      Delete
  13. Sir,
    I have worked in a pvt Ltd company for 13.4 years . last year resigned. Whether I am eligible to get a pension. My last drawn basic salary is 14085.

    ReplyDelete
    Replies
    1. Absolutely my friend. You should be eligible for pension, assuming your PF was getting deducted and deposited through your working years.

      Delete
  14. Helpful information

    ReplyDelete
  15. Sir,
    From 2007 to 2011 I worked in a pharma company after that I joined another company. I withdraw the EPF of previous company from regional office of Kolkata.please advise me about the EPs contribution of my previous employer. Should I able to withdraw the corpus EPs amount. If yes suggest how.

    ReplyDelete
    Replies
    1. EPS can be withdrawn using the EPFO portal of Government of India, or by contacting your previous employer.
      Regards
      Manoj

      Delete
  16. Hi sir

    My father will be retire next month April 13 his basic salary is 13000
    And service years 32.

    Please confirm what would be his pension per month after retirement.

    Thanks in advance for your help.

    Regards
    Anil
    No 9910548276

    ReplyDelete
    Replies
    1. Dear Anil
      Pension cannot be calculated just on the basis of last basic salary. To estimate the pension, you need to first calculate what is called as 'Pensionable Salary'.
      Pensionable Salary is arrived as the average of 60 months last drawn salary. If Rs. 13000 was his last basic salary, you will have to look back at the basic salaries of last 5 years and then take an average (as explained in the article).
      Let us assume that your fathers 5 year average of the basic salary (called as Pensionable Salary) comes out to be Rs. 11000 per month.
      Pensionable Service in your case is 32 years.
      So, Pension = (11000*32)/70 = Rs 5028 per month.

      Delete
  17. Replies
    1. Responded above Anil..Apologies for the delay in response.
      Cheers
      Manoj

      Delete
  18. Hi Sir,

    I worked with Wipro Ltd (A private company) for 3 years from 2011-2014 and after that I haven't joined any company since. When I received my final settlement from Wipro , they had left the EPF account section as blank and EPF amount as zero but my salary slips always had a deduction under the category PF .
    1.So does this mean that Wipro is not a member of EPF and EPS ? If so , why did they deduct money from my salary every month ?
    2.Also with only 3 years of service am I eligible for Pension ?

    Thank you in advance for your reply .

    ReplyDelete
    Replies
    1. Dear friend
      If PF was deducted from your salary, you have all the right to ask your employer about the latest PF statement and withdrawal procedure. It is quite unlikely that an organisation like Wipro is not a member of EPFO. But you must check with your employer immediately.
      You are not eligible for pension since you have not completed 10 year, though you can withdraw the accumulated amount.
      Regards
      Manoj

      Delete
  19. Hello Sir :

    I am 52 years old lady, working in a private company for the past 25 years (15.9.1992) and my current basic salary is Rs.16180. I am planning to quit the job this year. Kindly let me know what will be the approximate pension I will be receiving once I retire. Also, how I should apply for getting the pension. Kindly explain.

    With kind regards

    CHITRA

    ReplyDelete
    Replies
    1. Dear Chitra

      Pension cannot be calculated just on the basis of last basic salary. To estimate the pension, you need to first calculate what is called as 'Pensionable Salary'.
      Pensionable Salary is arrived as the average of 60 months last drawn basic salary. If Rs. 16180 was your last basic salary, you will have to look back at the basic salaries of last 5 years and then take an average (as explained in the article).
      Let us assume that your 5 year average of the basic salary (called as Pensionable Salary) comes out to be Rs. 14000 per month.
      Pensionable Service in your case is 25 years.
      So, Pension = (14000*25)/70 = Rs 5000 per month.

      Delete
  20. Hi Sir,

    Thanks for all your valuable information

    My brother used to work for a private company and he died in road accident while he is in service. He completed 5 years in that organization. He has a PF contribution for that 5 years.He was 31 years old when he died. EPFO has settled the PF amount with my sister in-law.He has 5 dependents wife,2 children,father and mother.
    His last month drawn basic is 15000 (last 5 years agv is 10,000).
    as per the formula pension = 10000*5/70=714 rs ? or does it depends on the number of dependents ? as here the number of dependents 5 will it be 5*714=3570?

    ReplyDelete
    Replies
    1. Dear Srikanth !
      Pension Amount does not depend on the number of dependents. Hope that clarifies.
      Regards
      Manoj

      Delete
  21. Dear Sir,

    i am an ex employee of The Associated companies retired in the year 2005 after completion of 31 years of service with the company at their various plants in India. I am not getting any pension as I had not opted for Family Pension scheme when launched. Subsequently the Family Pension Scheme was made compulsory for all employees. Under the circumstances do I become eligible for Pension and if yes where am I to approach to formalize the process.
    Regards,

    Ashok Kumar Ahelleya

    ReplyDelete
    Replies
    1. Dear Ashok
      Check with your employer whether EPS was getting accumulated for you. If yes, then you still have a chance.
      Regards
      Manoj

      Delete
  22. Respected sir, I am looking for suggestions on below ....I have worked for 13 years in different 3 organization's, my of was recovered from every organisation. Now due to personnel reasons I want to take break hence I resigned. After 2 years I may join in some other organisation. Now what is the status of my provident fund and pension fund. Whether can I retain or need to withdraw kindly clarify. Thanks in advance -Kalyani

    ReplyDelete
    Replies
    1. Dear Kalyani
      If you have not withdrawn PF and Pension for the last 13 years, and are taking a 2 year break - you need not withdraw your amount. It is safe with EPFO and will also earn tax free interest as long as they are holding it.
      Suggest hold it with them.
      Regards
      Manoj

      Delete
  23. Regarding pension and of looking for successions for a private employee

    ReplyDelete
    Replies
    1. Dear Kalyani,
      Unable to comprehend your question clearly !
      Regards
      Manoj

      Delete
  24. Hi Manoj,
    I left my first employer after working 2.7 years with them. After quitting the job, I withdrew my PF amount. How can I know that my EPS was withdrawn also? I don't remember what forms I filled during withdrawing process.

    ReplyDelete
    Replies
    1. Dear Shobhna
      check your PF statement. EPS is always mentioned under a separate head.

      Regards
      Manoj

      Delete
  25. Dear Manoj, thank you! some thing so important and explained by you in simple words could not be explained by my employer. Its funny!! I must appreciate your effort and the time and patience you have given to each and every query raised!! Wish you success in your mission and endeavour!

    It also brings me to you for guidance on EPS. I have resigned a year back from 22 yr long service and have been chasing for EPS certificates from my ex-employer. I have not been getting any concrete reply on where is it stuck or when will i get EPS certificate! I have received my EPF amount last year but no visibility on EPS certificates Does it take this long? who can i reach out to besides my exemployer?

    Hoping to hear from you!

    ReplyDelete
    Replies
    1. Dear Friend
      Check for your EPF Statement and the Amount that has been settled. The total money accumulated (both under EPF and EPS) is mentioned in your EPF Statement. If you think you have not been paid your rightful EPS amount, and your employer is not responding, please connect with EPFO directly. They should be able to help.
      Keep me posted. I will look out for further sources that can help you.
      Regards
      Manoj

      Delete
  26. Dear monoj
    I had worked in a limited company from 1989 to 2007 my employer deposited all payments to govt and i got my pf . since my age was not 50 i could not get discounted pension . now i am 50 + , i want to get pension and for that i will fill up form 10 d .now i have heard that now calculation are making on rs 15000 basis instead of rs 6500 but my employer already deducted 6500 basis from my salary and deposited the same to govt . i also heard that one circular realesed by govt that since employer has not deposited on the basis of 15000 , the employee can deposit the amount and get pension on 15000 basis , is it true .secondly if any body getting pension on the basis of 6500 and want to deposit money for getting pension on the basis of 15000 , can he do this

    ReplyDelete
    Replies
    1. Dear friend
      Please note that, as mentioned in the article above, vide notification dated 22.08.2014, Ministry of Labour and Employment has increased Pension contribution from Rs. 541pm ceiling (Rs 6500 annual) to Rs. 1250pm (RS 15000 annual) ceiling.
      Prior to Aug 2014, all contributions were on the basis of Rs 6500 ceiling. Post that, all contributions are with the new ceilings.
      Based on this, your total contribution is checked and then pension amount is decided.
      We cannot claim anything else.
      To your second query, we cannot decide what we want to deposit in pension fund. It is deposited from the employers contribution of 12% subject to above ceilings.
      Hope this clarifies. Apologies for the delayed response.
      Cheers
      Manoj

      Delete
  27. Sir, Thank you for this very informative post.

    I have a doubt. Will you please clarify?

    I got a job in a private company when I was 45 years old. Now I am 49 year old. Every month Rs.1250 goes to my EPS.

    Now my company is about to close. I am not sure I can find another job. That means I am not completed 10 years and I am not reached 58 year old. Is that means I cannot withdraw the amount and I am not eligible for pension?. Am I going to lose the whole amount paid into pension account?

    Please clarify.

    ReplyDelete
    Replies
    1. Dear Mohamed
      You may not be eligible for a pension since you have not completed 10 years, but that does not mean you lose the money. Instead of pension, you can withdraw the entire amount and then invest as needed. You do not lose any money.
      Please read the section "What Happens if you resign before completing 10 years of service?" in the above article.

      Hope this clarifies.
      Cheers
      Manoj

      Delete
    2. Thank you verymuch. No words to appreciate your willingness to help.

      Delete
    3. It is an honour to be able to serve anyone...Cheers Mohamed !

      Delete
    4. Dear Manoj Sir, my father was working with private sector for more than 20 years, he withdrawn entire amount after his retirement including EPF, not sure about EPS. My father died before 7 years, can I claim pension for my mother irrespective my father had withdrawn or not EPS amount.

      Delete
    5. Dear Ravi
      During witdrawal, there are two forms that are filled up - Form 19 for EPF and Form 10 for EPS. the EPS Form (Form 10) gives you an option to either withdraw the amount, get a certificate for pension, or put the amount in annuity. Based on the documentation that your father may have filled up, you may need to take the next step.
      Regards
      Manoj

      Delete
    6. Dear Sir.. Really appreciate the efforts taken by you to help the ppl without any expectations.. its hard to believe Ppl like you still exist in dis world.. Hats off to you Sir


      To get more clarity, need your help to know what is "certificate for pension" and "the amount in annuity", can we claim in both cases.

      Delete
    7. Dear Ravi
      If you decide "not to withdraw" your pension or you are "not eligible to withdraw" your pension (if you have served 10+ years), and if you are less than 58 years of age, you have a choice to apply for a "Pension Certificate", also called as a "Scheme Certificate" instead of starting to get pension immediately. You can then claim your pension starting at the age of 58 years. The benefit of this certificate (instead os starting your pension) is that in case of a mishappening with you before attaining the age of 58 years, your family can claim a lifelong pension.

      On the annuity query, the pension that you finally start getting (whenever you decide to get that by depositing your scheme certificate) is given to you by depositing your accumulated EPS amount in an annuity scheme.

      You cannot of course claim both :)

      Hope this clarifies. Please feel free to write back in case you need any further clarifications.
      Regards
      Manoj

      Delete
    8. Thanks a ton Sir... God bless you.

      Delete
    9. Dear Manoj Sir,

      Further to our discussion, I checked with my Dad’s company HR, they have given to me understand that “ your Dad’s is not eligible for pension as there was contribution only towards PF & not for pension”. As per company’s internal policy, they were not use to do any contribution to pension for any of their employees till 2006. My Dad retired in 2006. Please suggest.

      regards,
      Ravi

      Delete
    10. Dear Ravi,
      Pension contribution is done by the company from within the 12% that they are supposed to contribute to the PF. If there was no contribution to Pension by the company, then the entire 12% contribution of the company should have been in the PF Amount. Please check your Dad's PF statement to make sure it was. If you find it true, then the company is right. If not, we can escalate the matter.
      Regards
      Manoj

      Delete
  28. Is there any revision in monthly pension for private sector in due time.

    ReplyDelete
    Replies
    1. Dear Friend
      Vide notification dated 22.08.2014, Ministry of Labour and Employment has increased Employee Provident Fund (EPF) from Rs. 541 ceiling to Rs. 1250 ceiling. There has been no further increase after that.
      Cheers
      Manoj

      Delete
  29. Dear Manoj sir
    Please tell for me having basic salary of 40000 and above in a private company and have completed more than 10 years having age of 48 Years what would be the minimum amount of pension I am eligible for and when do I get it started from.
    Thanks and regards
    Surendra Singh

    ReplyDelete
    Replies
    1. Dear friend
      Monthly pension = ( Pensionable salary*Pensionable service)/70
      If your Pensionable Salary (see how it is derived in the article above) is INR 40,000 pm and you finish your service with total 20 years of contribution, then
      Monthly Pension = 40,000 * 20 / 70 = INR 11,428 pm

      Regards
      Manoj

      Delete
  30. my salary is 7600

    ReplyDelete
  31. Dear Manoj sir
    Please tell for me having basic salary of basic+DA 7800 in a private company and have completed more than 10 years having age of 51Years what would be the minimum amount of pension I am eligible for and when do I get it started from.
    Thanks and regards
    Surendra Singh

    Reply

    ReplyDelete
    Replies
    1. Dear Surendra
      Monthly pension = ( Pensionable salary*Pensionable service)/70
      If your Pensionable Salary (see how it is derived in the article above) is INR 7,800 pm and you finish your service with total 20 years of contribution, then
      Monthly Pension = 7,800 * 20 / 70 = INR 2,228 pm

      Regards
      Manoj

      Delete
  32. Hi Manoj sir,

    I am Amit from Mumbai, I just read your blog as I want to know about what happens to my pension amount deducted from PF and found your blog very helpful for people like me. When my company started deducting my pf in Sept-2014 I had so many questions, but I didn't find any useful help at that time. Right now I don't have any question just want to say thanks for sharing helpful information with us. I will definitely contact you in the future for help.

    ReplyDelete
    Replies
    1. Dear Amit
      It has been a pleasure to serve you !

      Cheers
      Manoj

      Delete
  33. Dear sir,
    I have worked for a company for 7 years. I submitted Form 19 and Form 10C.
    My doubt is regarding EPS amount. In Passbook the EPS amount shown is Rs.65,478.
    Now what is the amount that i would receive.
    My basic salary at the time of resigning is Rs.28,768/-
    According to the table i see 7.13 for 7 years and assume it could be Rs.28,768 *7.13=205115/- (or is there any cap on Basic amount)
    Is this correct? Please correct me if i am wrong.

    ReplyDelete
  34. Hello Mr. Manoj,
    I am working in a private company and my present basic salary is Rs. 1,20,000/-
    I have completed 7.5 years and want to continue to complete 10 years minimum to be eligible for pension.

    By that time I'll complete 10 years, my basic salary would have been 1,50,000/- considering annual increment.

    If I calculate average pensionable salary as Rs. 1,10,000/- PM, my pension will be around 15000/- PM. Am I doing correct calculation or anything differs from my calculation.

    Please advice.

    Thanks and Regards,

    S. S. Nanda

    ReplyDelete
    Replies
    1. Dear Mr. Nanda,
      Thanks for writing in.
      If you read the article above carefully and specifically the section "What is the maximum amount of Pension available under EPS?", you will find that :
      Based on a maximum employment period of 35 years, and maximum contribution of Rs 15000 (there is a cap on monthly pension contribution irrespective of your basic salary), the maximum amount of pension as per the Pension formula would be = 15000 * 35/70 = Rs 7,500 per month or Rs. 90,000(7500 * 12) per year.

      Hope this clarifies.

      Cheers my friend
      Manoj

      Delete
    2. Dear Mr. Manoj,

      Thanks again for showing me the correct calculation.

      This means after 10 years of service I may be eligible for a very small amount of pension.

      Is there any better option to get a good amount of pension at least Rs. 15000/- PM ??

      Please let me know if there is any better option considering my present age of @45 years and I want to continue my service maximum up to 50 years..

      I'll eagerly wait for your kind response.

      Thanks and Regards,

      S. S. Nanda

      Delete
    3. Dear Mr Nanda
      You are right. EPS is never good enough for any of us as a source of pension. There are many other options that you have to generate a regular source of income. Invest your accumulated amount in
      1/ Annuity
      2/ National Pension Scheme (NPS)
      3/ Equity Mutual FUnds (withdraw via SIPs)
      4/ Laddered Fixed Deposits
      5/ Monthly Income Plan (MIP) based Balanced funds..

      Each has its merits and demerits. If you ask me, considering that you still have 5 years of service, you can invest in good equity mutual funds via SIP for the next 5 years and expect an annual returns of around 15%. You can then withdraw via SWP on a monthly basis. The "pension" so created will be big enough than what you are expecting right now.

      Feel free to let me know if you have any specific query.

      Cheers
      Manoj

      Delete
  35. Hello sir my father passed away in 1992. He was working in private sector...... So My mother getting pension only Rs.1100/. Every month... I have heard something like private sector pension is going to increase by Rs. 10000 every month from Sept21017 is it true??? Please give me information please that will be very helpful to us

    ReplyDelete
    Replies
    1. Dear friend
      I am sorry but I have absolutely no such information, and I see no such reason for private sector pension to go up.
      Private sector pension (EPS) is based on accumulated corpus during service, and was always very meager. Now a days, we have NPS whereby one can contribute much higher mount to pension fund, and therefore realise much higher pension per month. But to get that, we need to contribute first.
      Cheers
      Manoj

      Delete
  36. Hello Sir, I have a basic salary of 174000/-. Every month my company deduct 1250 for pension fund, i m 42 years old and i plan to retire by 58 what will be my pension at retirement assuming 7-8% salary increment every year?

    Thanks and Regards
    Priya

    ReplyDelete
    Replies
    1. Dear Priya
      You did not tell me your start date of employment. So, let me make an assumption. Based on a maximum employment period of 35 years, and maximum contribution of Rs 15000 (there is a cap on monthly pension contribution irrespective of your basic salary), the maximum amount of pension as per the Pension formula would be = 15000 * 35/70 = Rs 7,500 per month or Rs. 90,000(7500 * 12) per year.

      Hope this clarifies.

      Cheers my friend
      Manoj

      Delete
  37. Dear sir,
    My PF withdrawal documents have been submitted and shown as received on 31-05-2017 and is showing as under process from then. How long would it take to receive the amount?. Please let me know how long should I wait.

    ReplyDelete
    Replies
    1. Dear friend...
      It takes anywhere between 30-60 days before the amount gets credited to your bank account.
      Cheers
      Manoj

      Delete
  38. Dear Sir
    i was working as MR in MERCK LTD. India with HQ at Delhi and residence in NOIDA which is my permanent address.I retired on 12th April 2016.I started getting pension from 1st Jan 2017 in my SBI account in Noida regularly on 1st of every month since Jan 2017.But in June 2017 i have not received my pension till date.Please guide me whom to contact in Delhi/Noida and in which department and which office as Google are showing 6 offices in Delhi and Noida, as my companys office in Mumbai has conveyed to me that my pension files has been sent/ shifted to Delhi from Mumbai.Please guide me, i will be highly obliged to you.
    thanks & regards
    VIJAY KUMAR VERMA
    vijay2winn@gmail.com

    ReplyDelete
    Replies
    1. Dear Vijay
      Since yours is a pretty recent case, I think that the best bet would be to connect with your employer. They would be the best ones to contact to find out the possible reason for this discontinuation of pension, and how to get it revived.
      Cheers
      Manoj

      Delete
    2. I have been getting pension since 8-10 months, and suddenly it has stopped since June 2017, without any information to me about reason for it. They withheld credit in Dec and my bank said I had to submit Life certificate. This time,money hasn't even come from EPFO. EPFO is a terrible (non)communicator.

      Delete
    3. I too haven't received pension since June 2017, and there is no information from EPFO about the reason. They never informed me when they started paying pension, never told me that I need to submit Life Certificate in Nov, and now again, I am mystified about the reason for stopping my pension since 2 months.

      Delete
    4. Those whose pension have been discontinued may please immediately connect with the bank where your pension was being credited. You might need to submit a Life Certificate (once every year) to prove that you are alive and that your pension should keep continuing.
      Regards
      Manoj

      Delete
  39. Respected sir,
    I've been working with an organization from 8years and 6months.if i resign my current job and join new organization with same UAN ,will i be eligible for pension after my total service of 10 years with my new organization...
    Is it mandatory to work in single organization for 10years or working for 10 years under EPF makes us eligible for pension after retirement.
    Also,please give more information about the rules for withdrawal of pf and it's importance with pension. Thanks in advance sir

    ReplyDelete
    Replies
    1. Dear friend
      Pension benefit is calculated with formula as shown in the log post above. If you look at the formula, note that it is fully dependent on length of service of subscriber and last average wages on which pension contribution is made. Hence total contribution in EPS is sort of not relevant and also no accounting done like EPF contribution.

      When Transferring PF amount the service details information viz length of service, non-contributory period, last wages drawn etc are transferred along with PF details and PF amount for information of receiving office in Annexure-K to calculate pension benefits correctly.

      Pension amount has no real relevance because the calculation of EPS Pension would be done again during resignation or retirement.

      Hope this clarifies.

      Regards

      Manoj

      Delete
  40. Hi Sir,
    I worked in a private sector between year 2005-2010 that time my salary was below 15000/- and every month PF amount was being deducted. After leaving job I withdraw my EPF amount but was not aware about EPS.So,my enquiry is that can I withdraw my EPS amount now. If yes than what are the formalities requires.

    ReplyDelete
    Replies
    1. Dear friend
      You would have filled up Form 19 for EPF withdrawal. Did you fill up Form 10 also at that time? (Form 10 is for EPS withdrawal)
      If you did not, then you can connect with your organisation, fill up Form 10 and submit it to EPFO through them. You should get it within 30-60 days of submission.
      Regards
      Manoj

      Delete
  41. Dear sir,
    I received PF amounts today .
    But i am not convinced with the money that was credited.
    My total contribution as shown in PF statement latest is as follows
    Employee contribution :Rs.208,887/-
    Employee contribution: Rs. 131,847/-
    Pension contribution : Rs.65,478
    Note:
    These amounts are as on 03/2017 which implies interest has not yet been calculated.

    I received two payments as follows
    1) INR 3,72,274.00 deposited to A/c No XX0089 towards NEFT Cr-SBIN0000847-EMPLOYEE PROVIDENT FUND ORGANIZATION
    2) INR 65,418.00 deposited to A/c No XX0089 towards NEFT Cr-SBIN0000847-EMPLOYEE PROVIDENT FUND ORGANIZATION.
    No where these amounts match with my expected figures.

    Also, In earlier comment i asked about pension fund, My basic as my resignation time is around 28k. for 7 years service i should get 7.13*28768=205115.84

    The received amounts seem incomplete.
    what should i do now. I mean are these correct or should i wait for some more time.

    ReplyDelete
    Replies
    1. Dear Sravan,
      As far as EPF amounts go, the approx total is Rs. 3,40,734 as on 03/2017. If you calculate the interest for 1 year (@ 8.65%), this should work out close to Rs. 29,473. The frand total for EPF comes to approx Rs. 3,70,207. Since you have got Rs. 3,72,274 - this seems just logical and correct (rest could be the interest for any month in this financial year when the money was with EPFO or a higher rate of interest levied for initial months of the prev financial year)

      Now for EPS, I am also not clear how they have paid you only 65,418/- if you have opted for EPS withdrawal since you have served less than 10 years and are yourself less than 50 years of age. You must ask for the EPS calculations from the person you have been communicating until now.

      Take care, and let me know once you get the calculations.

      Regards
      Manoj

      Delete
    2. Dear sir,
      the company asked me to directly contact the PF office. i raised a grievance, but, i have not got any response till date. can you please suggest how can i escalate this issue. also can you please refer me where in PF site can i find the table,that is used to calculate the EPS withdrwal amount.
      thanks in advance

      Delete
    3. Dear Sravan
      Hope you raised the grievance at this link : http://epfigms.gov.in/
      If yes, and have still not got any response, you may try connecting any of the EPFO officers via phone as given in the link : http://www.epfindia.com/site_en/Contact_office_wise.php?id=HO
      If this also does not help, it is better to pay a visit to their regional office and put up your case.

      Here is the EPFO document link, which lists all the rules. For withdrawal benefit, read Para 14 (Page 19) and refer to Table D (Page 51)

      Do let me know if you have any queries.

      Regards
      Manoj Arora

      Delete
    4. Dear sir,yes I have registered at the said link.
      I have attached below the response received. I didn't understand what that means. Can you please explain.

      Mail as follows.
      Dear Sir/Madam,
      This is with reference to your Grievance registered vide Registration Number ROHBD/E/2017/06708.
      It is informed that after processing your grievance,the following action(s) has been taken:
      Madam, It is to inform that, an amount of Rs.60/- is available in pension fund, you may prefer Advance Stamp receipt for withdrawal pl.

      Therefore, we are closing your grievance from this office.Please quote the same in your future correspondence.

      Delete
    5. Dear Sravan,
      This response is not clear. You have to ask the EPFO office to explain the EPS calculation. As per the EPFO office, here is the official document. Annexure D clearly gives the table..
      http://www.epfindia.com/site_docs/PDFs/Downloads_PDFs/EPS95_update102008.pdf

      Regards
      Manoj

      Delete
  42. Hi manoj,
    Need your suggestion please. I am currently working in Accenture and just completed 7 years.my basic salary is 22000 and I am leaving Accenture next month. Is it a good idea to transfer epf and eps or to withdraw?

    ReplyDelete
    Replies
    1. Dear friend
      If you have an emergency need, then you may withdraw - else, in most cases, let it build up. There is immense magic in compounding, which is visible with delayed gratification only. EPF is one of the best "debt based" investment you will ever do - decent returns, tax free and ultra safe. Get it transferred to your new organisation.
      Cheers
      Manoj

      Delete
  43. Hi Manoj,

    Couple of years back when I left my first company I withdrew the pf and pension.

    Can I pay back my pension amount to pension fund so that mybold service also counted? I don't want lose the service since we need to work minimum 10 years to get pension . Please advice.

    ReplyDelete
    Replies
    1. Dear Dharma
      It is not possible to revert your pension amount after having withdrawn it. Moreover, if you have not worked for 10 years, you will still get the pension. Additionally, you get the option to withdraw the entire amount as per the article above. Post 10 years of service or attainment of 50 years of age, you only get pension - and no withdrawal option.
      The pension you get is so meager that I would personally advice you to withdraw and invest the amount in a good debt fund with monthly income option. This will give you much better monthly income than the pension itself.
      Hope this clarifies.

      Regards
      Manoj

      Delete
  44. Dear Manoj jee,
    I want to ask you one question I want to know whether pension will be get lifelong for a member or pension will be getting whatever amount is deducted from a particular employee.

    ReplyDelete
    Replies
    1. Dear friend,
      Pension is life long.

      Regards
      Manoj

      Delete
  45. Dear Manoj Ji,
    Would help if you can kindly help... I worked for an Org exactly for 9 yrs under an UAN in Maharastra/Bandra EPFO office. Now i shifted my job to a new company last October`16 but this company created a new UAN in Maharastra, PUNE EPFO office unfortunately and started putting my PF monthly in it now. I did all the due diligence to transfer the PF accumulation from to the MH/Bandra PF account to the MH-Pune PF account and it happend without any issue. However i dont know what i am suppose to do for EPS. My current employer is stating that transfer would add the previous tenure to the current account even if both are under different UAN, but i am not convinced... can you kindly guide me on the step i need to perform next..

    Regards
    Mrinmoy

    ReplyDelete
    Replies
    1. Dear Mrinmoy
      What your current employer is saying is right. We must understand that what gets transferred to the new employer for EPS is not any money but your tenure, basic pay, date of joining, date of birth, Adhaar data etc. EPS applicable for you will be freshly calculated at the time of your retirement.
      Hope this clarifies.
      Regards
      Manoj

      Delete
  46. Sir, Thank you so much for this nice article. I have a query: I switched job after 1.8 years of service and transferred my EPF online using form 13 and as you said EPS money is not transferred and its the tenure which gets transferred. The same happened with me and I can see that in the latest statement also. I have total of 4.5 years of association with EPFO. I am not able to understand where is that money and what should I do with that? How can I withdraw it (only EPS amount)? Beacuse I can't see it, I am a little worried.

    ReplyDelete
    Replies
    1. Dear Anurag
      As I understand, you have 4.5 years of association with EPFO. Your question is where your EPS money? the answer is that you can assume it to be with the EPFO. You cannot do anything with that money unless you quit working forever or you retire at the age of 58 years. You cannot withdraw prior to 50 years of age at any cost. It is supposed to be your pension money, and hence these constraints on withdrawal.
      Your EPF statement should also list down your accumulated EPS money.
      Cheers
      Manoj

      Delete
  47. Thanks for the informative article. Some queries:
    1) You said: 'If you resign before completing 9 years and 6 months of service, you get the “withdrawal benefit” which depends on your monthly salary and the no. of years of service.'
    Is the service restricted to the last employer alone or would service across all employers be considered? For example, if I have worked for my last employer for 9 years 4 months and with an employer prior to that for 6 months, my total years of service across all employers would be more than 10 years but with the last employer, it would be only less than 9.5 years >> in which case I should be eligible for withdrawal benefit, right?
    2) You said: 'Monthly pension = (Pensionable salary*Pensionable service)/70'
    But could you clarify what exactly you mean by 'Pensionable salary'? That is to say, which of the following is it?...
    a) Is it just the basic which is considered or
    b) is it the gross pay (which would include basic + hra + special allowance + food allowance + spot bonus etc.) or
    c) is it the net pay (take home) [i.e. gross pay less deductions such as pf, professional tax, income tax, etc.]?

    ReplyDelete
    Replies
    1. Dear friend,
      If you have transferred your EPF account from your last employer to your new employer, your EPS details are also automatically transferred and hence your service becomes more than 10 years - in which case you are not eligible for withdrawal benefits.
      The definition and formula for Pensionable Salary is given in the article above under the heading "What is the formula for calculating the monthly pension?" Salary means only basic salary.
      Hope this clarifies.
      Regards
      Manoj

      Delete
  48. Dear sir,
    I have joined Nov 2009 in a private co. And as per last statement my pension fund amt. RS. 77k . Wn I wl eligible for pentionable job ? My current basic is 45k . Is it justifiable to change the job with 20% hike? If yes the balance period should consider in new organisation or not.

    ReplyDelete
    Replies
    1. Dear Subash
      Minimum 10 years of service is required to start getting pension. You can change the job, even with 0% hike or even with reduction in salary - it all depends on the reason to change. You might see a long term potential in the new job, you may enjoy the work environment more in your new job, you may even like the role - salary is not the only reason to change a job. So, 20% is good enough hike if all other factors remain the same. As far as your pension is concerned, it will be moved along with your EPF once you submit the form for the same on moving to a new job.
      Regards
      Manoj

      Delete
  49. Thanks for sharing this article.
    Its really helpful..

    Thanks
    Zahir

    ReplyDelete
  50. Thanks for sharing this article.
    Its really helpful..

    Thanks
    Zahir

    ReplyDelete
  51. Dear Sir,
    I have worked with a private company from July 1981 to June 2017 ( Retirement age is 60), i am getting family pension ONLY @ 2255/month since July 2015.my basic salary was 28000/month.as per formula i should get more pension then 2255. i complaint several times but of no use
    Can i go for revised scheme of Family pension.
    G.Arora
    Nagpur
    9860797560

    ReplyDelete
  52. Dear Manoj sir
    Please tell for me having basic salary of basic+DA 33000 in a private company and have completed more than 15 years having age of 42 Years what would be the minimum amount of pension I am eligible for and when do I get it started from.pl. sir

    ReplyDelete
  53. Hi Mr Manoj,

    I have 2 queries.
    1. I have worked in different companies since 2004. All big telecom giants. My total continued service is for mor than 13 yrs. I have withdrawal all the EPFs earlier except the current one I am working in. Am I eligible for pension under the 10 year eligibility?

    2. My current company has mistakenly generated 2 UANs. One carries information of first 5 years of service and the new one carries the information of recent 2 years and current. What can be the repercussions? How to get it rectified?

    ReplyDelete