[Last Update : 01-Dec-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 of 12%, a lion's share of 8.33% actually goes in Employees’ Pension Scheme (EPS) and the balance 3.67% is invested in EPF.
However, if the basic pay of an employee exceeds Rs. 15,000 per month, the contribution towards pension scheme is restricted to 8.33% of Rs. 15,000 (i.e. Rs. 1250 per month) and the balance of employer’s contribution 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 (8.33% of Rs. 6,500 Basic Salary) ceiling to a new ceiling of Rs. 1250 (8.33% of Rs. 15,000 Basic Salary).
However, if the basic pay of an employee exceeds Rs. 15,000 per month, the contribution towards pension scheme is restricted to 8.33% of Rs. 15,000 (i.e. Rs. 1250 per month) and the balance of employer’s contribution 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 (8.33% of Rs. 6,500 Basic Salary) ceiling to a new ceiling of Rs. 1250 (8.33% of Rs. 15,000 Basic Salary).
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 basic salary. 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.
- You can also defer your pension till the age of 60 years.
- 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.
- EPS pension is fully taxable and must be considered under the head 'Income from Salaries' while filing your income tax returns.
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 60 years?
- You can opt for pension after 50 years of age but will have to forgo 4% for every year before you turn 58. In case of death / disablement, this restriction is not applicable.
- You can also defer your pension till the age of 60. If you opt for deferment, the pension would increase by 4% for every deferred year - up to the maximum age of 60 years.
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
Pensionable Salary
- It is arrived as the average of 60 months last drawn salary (Basic + DA) instead of earlier rule of last 12 months average salary.
- If someone is going to retire after 3 years with Rs. 15,000/- basic salary, and was working with Rs. 6,500/- basic salary earlier, then the pensionable salary calculation would be : (Rs. 15,000*3 + Rs. 6,500*2 )/5 = Rs. 11,600/- pm
- Maximum Pensionable Salary cannot exceed Rs. 15,000/- pm
Pensionable Service
- It is the service in years rendered by the member for which contributions have been received.
- Maximum Pensionable service cannot exceed 35 years.
- If you withdraw your EPS from earlier job,through Form 10C, then earlier years of service are not counted.
- If you have completed more than 20 years in service then add two years bonus in the above equation.
What is the maximum amount of Pension available under EPS?
Based on a maximum employment period of 35 years, and maximum pensionable salary of Rs 15,000, 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 1,250 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 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.
While lifelong pension may sound immensely lucrative, the actual returns are nowhere close to what one can manage of its own.
While lifelong pension may sound immensely lucrative, the actual returns are nowhere close to what one can manage of its own.
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.
Does EPS get transferred with EPF on change of Jobs?
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 employee contribution, 2nd for EPF employee contribution and 3rd for your EPS pension.
Actually, here is what happens during transfer.
If you look at the above pension calculation 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. Also, unlike EPF contribution, no accounting is done.
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.
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 employee contribution, 2nd for EPF employee contribution and 3rd for your EPS pension.
Actually, here is what happens during transfer.
If you look at the above pension calculation 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. Also, unlike EPF contribution, no accounting is done.
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 the death of the subscriber before attaining the age of 58 years, his or her family can claim a lifelong pension.
What happens on death / disability of the subscriber?
The Employees’ Pension Scheme offers the following benefits to employees covered under the Employees’ Provident Fund.
- Pension for life to member and spouse :Pension starts at the age of 58 and is based on the number of years of service and the basic salary.
- Pension to widow :If member dies during service, his widow will get his pension (at the reduced rate of 50% of the subscribers pension) for life or till she remarries.
- Two children will get additional sum equal to 25% of the pension. It is called as family pension. There is no minimum limit of service for the family pension.
- If the member is unmarried, the nominee gets the pension till the death.
- Pension for orphans :If there is no widow, 2 children of the deceased will receive 75% of the pension till the age of 25. if more than 2 children, the benefit will continue till youngest is over 25.
- Disability benefit :If a member is permanently and totally disabled during service, he will get full pension for life.
Recent Supreme Court rulings which remove the EPS Contribution cap
A few supreme court rulings in favour of employees seeking higher pension without any cap to the contributions has opened up a Pandora box of inquiries. A pension fund which used to pay a max pension of Rs. 7,500 pm (@ 2-3% pa returns on your employer's EPS contribution) opened up a pandora box of monthly pension amounts to the tune of Rs. 30,000-40,000 pm (@ 10-11% pa returns on your employer's EPS contribution).
One of the news report gives you more details:
A few people have misused the weakness in our EPS system. You see, it is all about removing the cap of your contribution to EPS (Rs 1250 pm).
Generally, the EPS pension returns are a meagre 2-3% annually max but this cap removal makes the pension formula redundant (as the formula was designed with the cap) and will lead to EPS returns of more than 11-12% via the enhanced pension. Even if this amount is taxable, it is still too good. Ultimately, it is all mathematics. Too much pressure on EPFO will lead to nothing else but bankruptcy.
Read this:
http://www.financialexpress.com/money/epfo-threatened-by-bankruptcy-over-pension-outflow-reason-will-surprise-you/944203/
The key is for EPFO to update the pension formula and make it universal (with or without cap). They have removed EPS subscription at higher basic salaries for employees joining on or after 1 Sep 2014. But this is India. They wont be able to do it in retrospect. So, it is an interesting battle between employee rights and EPFO bankruptcy. SC will perhaps intervene.
Till that time, if you have contacts in SC, you can fight it out for an awesome pension of around 30K per month - it might be worth the fight.
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)
Generally, the EPS pension returns are a meagre 2-3% annually max but this cap removal makes the pension formula redundant (as the formula was designed with the cap) and will lead to EPS returns of more than 11-12% via the enhanced pension. Even if this amount is taxable, it is still too good. Ultimately, it is all mathematics. Too much pressure on EPFO will lead to nothing else but bankruptcy.
Read this:
http://www.financialexpress.com/money/epfo-threatened-by-bankruptcy-over-pension-outflow-reason-will-surprise-you/944203/
The key is for EPFO to update the pension formula and make it universal (with or without cap). They have removed EPS subscription at higher basic salaries for employees joining on or after 1 Sep 2014. But this is India. They wont be able to do it in retrospect. So, it is an interesting battle between employee rights and EPFO bankruptcy. SC will perhaps intervene.
Till that time, if you have contacts in SC, you can fight it out for an awesome pension of around 30K per month - it might be worth the fight.
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.
Read the book From the Rat Race to Financial Freedom to plan and execute your wealth creation and freedom journey to perfection.
Read the book From the Rat Race to Financial Freedom to plan and execute your wealth creation and freedom journey to perfection.
Document History
1-Dec-2017 : General updates, Updates to Calculations, New section on Recent SC Rulings, What else does EPS Offer
1-Feb-2015 : Original Document
Related Posts:
- What is Universal Account Number / Permanent PF Account Number
- See what people say when they move from the rat race to financial freedom
- See what Media has been saying
- Withdrawal or Advance from Employee Provident Fund (EPF)
- Your assets are your employees
- Are you blindly following everyone around you?
- All about Employee Provident Fund
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
ReplyDeleteCheers !!
DeleteExcellent article with information. Appreciated sir
DeleteIs there any calculator for this
Thanks Kalpras. Are you looking for a pension calculator?
DeleteRegards
Manoj
As per new Supreme Court Rule the limit of pension amount raised to Rs. 15000/ per month. Please refer to "https://timesofindia.indiatimes.com/city/nagpur/sc-ruling-provides-for-higher-pension-to-pvt-employees/articleshow/57829747.cms"[web address at time of logging] (omit double quotes).
DeleteWith regards,
A well Wisher
I have gone through many other sites for EPF information.
DeleteThis webpage gives simple yet clear information, required on EPF & Pension.
Thanks for the contribution.
This comment has been removed by a blog administrator.
ReplyDeleteThis comment has been removed by a blog administrator.
ReplyDeleteThis comment has been removed by a blog administrator.
ReplyDeleteI 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
ReplyDeleteHello Reader,
DeleteJust 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
Sir iam jees this side.i would love to know where is the office of PF in delhi as my dad's private office is saying the PF office's Location has changed so they don't know much about his PF so please help me to reach till I know the entire detail of my dad's account ,please do guide me sir.with all due respect
DeleteTo u
N Y Kees
Sir,
DeleteI have another similar confusion and it would be great if you answer.
I am enrolled in EPF and EPS and contributing for the last 6 years.
If I leave my job and join railways today before completing one month of unemployment then would I be able to withdraw pension and PF.
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 ?
ReplyDeleteDear Mr Mohan Lal
DeleteYes, please do so now.
Cheers
Manoj
dear Sir,
Deleteis 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
Dear Upendra
DeleteYes, 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
This comment has been removed by a blog administrator.
ReplyDeleteHi Sir,
ReplyDeleteI 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.
Dear Khushwant
DeleteYour 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
I guess there will be a cap on this. That maximum cap on basic is Rs.15,000 . This might be the case.
DeleteHi Manoj ji,
ReplyDeleteMinimum 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)
Dear Raghavendra
DeleteSince 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
Dear sir kindly suggest me how to enter pension scheme for private company.
ReplyDeleteDear friend,
DeleteIf 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
Please help me
DeleteSir 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
ReplyDeleteReplied with the next comment
DeleteIn total he worked about 33years with numerous private concerns and there was a deduction for epf esi fund
ReplyDeleteDear Puja
DeleteApologies 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
Sir,
ReplyDeleteI 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.
Absolutely my friend. You should be eligible for pension, assuming your PF was getting deducted and deposited through your working years.
DeleteHelpful information
ReplyDeleteCheers my friend !
DeleteSir,
ReplyDeleteFrom 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.
EPS can be withdrawn using the EPFO portal of Government of India, or by contacting your previous employer.
DeleteRegards
Manoj
Hi sir
ReplyDeleteMy 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
Please update
DeleteDear Anil
DeletePension 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.
Sir,bonus year add nahi honge kya
DeleteWaiting for your reply sir
ReplyDeleteResponded above Anil..Apologies for the delay in response.
DeleteCheers
Manoj
Hi Sir,
ReplyDeleteI 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 .
Dear friend
DeleteIf 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
Hello Sir :
ReplyDeleteI 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
Dear Chitra
DeletePension 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.
Hi Sir,
ReplyDeleteThanks 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?
Dear Srikanth !
DeletePension Amount does not depend on the number of dependents. Hope that clarifies.
Regards
Manoj
Dear Sir,
ReplyDeletei 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
Dear Ashok
DeleteCheck with your employer whether EPS was getting accumulated for you. If yes, then you still have a chance.
Regards
Manoj
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
ReplyDeleteDear Kalyani
DeleteIf 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
Regarding pension and of looking for successions for a private employee
ReplyDeleteDear Kalyani,
DeleteUnable to comprehend your question clearly !
Regards
Manoj
Hi Manoj,
ReplyDeleteI 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.
Dear Shobhna
Deletecheck your PF statement. EPS is always mentioned under a separate head.
Regards
Manoj
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!
ReplyDeleteIt 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!
Dear Friend
DeleteCheck 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
Dear monoj
ReplyDeleteI 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
Dear friend
DeletePlease 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
Sir, Thank you for this very informative post.
ReplyDeleteI 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.
Dear Mohamed
DeleteYou 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
Thank you verymuch. No words to appreciate your willingness to help.
DeleteIt is an honour to be able to serve anyone...Cheers Mohamed !
DeleteDear 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.
DeleteDear Ravi
DeleteDuring 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
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
DeleteTo get more clarity, need your help to know what is "certificate for pension" and "the amount in annuity", can we claim in both cases.
Dear Ravi
DeleteIf 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
Thanks a ton Sir... God bless you.
DeleteDear Manoj Sir,
DeleteFurther 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
Dear Ravi,
DeletePension 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
Is there any revision in monthly pension for private sector in due time.
ReplyDeleteDear Friend
DeleteVide 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
Dear Manoj sir
ReplyDeletePlease 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
Dear friend
DeleteMonthly 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
my salary is 7600
ReplyDeleteDear Manoj sir
ReplyDeletePlease 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
Dear Surendra
DeleteMonthly 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
Hi Manoj sir,
ReplyDeleteI 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.
Dear Amit
DeleteIt has been a pleasure to serve you !
Cheers
Manoj
Dear sir,
ReplyDeleteI 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.
yes, you are right Sravan.
DeleteThank you very much sir.
DeleteAnytime, Sravan..
DeleteManoj sir
Deletemy last basic was 22000/-
Just Completed 9 years and resign.
want eps calculation.
is 9.33*22000 is correct. Or
9.33*15000/-(cap on basic) is correct.
Hello Mr. Manoj,
ReplyDeleteI 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
Dear Mr. Nanda,
DeleteThanks 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
Dear Mr. Manoj,
DeleteThanks 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
Dear Mr Nanda
DeleteYou 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
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
ReplyDeleteDear friend
DeleteI 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
Thanx for ur reply appreciated
DeleteCheers my friend !
DeleteHello 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?
ReplyDeleteThanks and Regards
Priya
Dear Priya
DeleteYou 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
Dear sir,
ReplyDeleteMy 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.
Dear friend...
DeleteIt takes anywhere between 30-60 days before the amount gets credited to your bank account.
Cheers
Manoj
Dear Sir
ReplyDeletei 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
Dear Vijay
DeleteSince 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
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.
DeleteI 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.
DeleteThose 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.
DeleteRegards
Manoj
Respected sir,
ReplyDeleteI'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
Dear friend
DeletePension 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
Hi Sir,
ReplyDeleteI 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.
Dear friend
DeleteYou 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
Dear sir,
ReplyDeleteI 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.
Dear Sravan,
DeleteAs 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
Dear sir,
Deletethe 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
Dear Sravan
DeleteHope 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
Dear sir,yes I have registered at the said link.
DeleteI 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.
Dear Sravan,
DeleteThis 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
Hi manoj,
ReplyDeleteNeed 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?
Dear friend
DeleteIf 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
Hi Manoj,
ReplyDeleteCouple 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.
Dear Dharma
DeleteIt 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
Dear Manoj jee,
ReplyDeleteI 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.
Dear friend,
DeletePension is life long.
Regards
Manoj
Dear Manoj Ji,
ReplyDeleteWould 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
Dear Mrinmoy
DeleteWhat 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
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.
ReplyDeleteDear Anurag
DeleteAs 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
Thanks for the informative article. Some queries:
ReplyDelete1) 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.]?
Dear friend,
DeleteIf 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
Dear sir,
ReplyDeleteI 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.
Dear Subash
DeleteMinimum 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
Thanks for sharing this article.
ReplyDeleteIts really helpful..
Thanks
Zahir
Cheers my friend !
DeleteThanks for sharing this article.
ReplyDeleteIts really helpful..
Thanks
Zahir
Cheers Zahir !
DeleteSir,
ReplyDeleteI am working in a private organization since 1982. I am retiring on 31.01.2018 at the age of 58. My service has covering 3 phases if pension scheme I.e. up to Nov,1995,from Nov,95 on wards with a EPs contribution @541pm till Aug,2014 & Rs.1250 pm from Sep'14 to Jan 18 @ 1250 pm and I am completing 36 years of service and my average salary is Rs.24000/- pm. Please let me know the maximum pension I will get from Feb, 2018.
Dear Sir,
ReplyDeleteI 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
Dear Manoj sir
ReplyDeletePlease 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
Dear friend
Deleteyour pensionable service is 15 years and your max pensionable salary would be considered as Rs 15000 pm (this is the upper cap). If you retire today, the pension will be calculated based on this data, using the formula given in the above article as: 15000 * 15/70 = Rs. 3,214 pm.
As your number of years increase, your pension will also increase. Considering 35 years of max possible service, your maximum pension is limited to : 15000 * 35/70 = Rs. 7500 pm.
Regards
Manoj
Hi Mr Manoj,
ReplyDeleteI 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?
Keep on working, great job!
ReplyDeleteCheers my friend
DeleteHello Manoj,
ReplyDeleteThanks for sharing knowledge. I have query regarding Pension withdraw before 10 years.
I have joined my first company and start EPS contribution in 1st April 2009. At that time, as per PF deduct rule, my company was deduct as 6500 basic amount and i.e. 780 + 780 rs. After that from 1st Sep,2014 It was start deduction as 15000 basic amount i.e. 1800+1800 rs. Now, as on 31st July. I have ended service and its become total 8 year and 4 month. After 2 month i.e. on 1st oct. I will be put request to withdraw full amount but i am not sure how much i will get from pension amount because as per exit wages I have worked with multiple basic salary i.e. 6500 and 15000 so I am confuse how much I should get from EPS. Can you please clear me? Many thanks in advance.
Regards,
Vishal Mirani
dear sir i was working in private company for last 22 years no i switch the job can i eligible for pension
ReplyDeletenow i am 37 years old
Dear Bibhishan
DeleteYes, you are eligible. If you have got your EPF transferred to the new company, your pension details are also transferred automatically
Regards
Manoj
Dear Sir,
ReplyDeleteThanks for this nice article. I have a query,please do the needful. I changed my job after 3.6 years of service and not transferred my EPF amount to new organization .Current company not given EPF amount for 1 year and with my request presently EPF amount is detecting with different UAN &PF account. Sir, EPF team will consider my previous experience or not?.. . If yes what should i do to get it done. If no shall i go for withdraw amount. Thanks in Advance.!!
Awaiting for your reply..!!
Best Regards,
Sudhakar Reddy
Dear Sudhakar
DeleteIf you have not got your EPF account transferred to your new organisation, then there is no way your previous experience will be considered by the EPF team. It is better to withdraw the amount in that case.
Following two posts will help you to understand the other nuances better:
1/ http://elevate-your-life.blogspot.in/2017/11/epf-taxation-laws-post-leaving-your.html
2/ http://elevate-your-life.blogspot.in/2015/10/tax-implications-on-pf-withdrawal.html
Let me know if you have any further questions. Would be more than happy to help.
Regards
Manoj
Dear Sir,
ReplyDeletePlease inform after retirement (with total contribution to EPS and minimum 10 yrs), a retired person gets only pension OR pension with lumpsum amount?
Please clarify.
With regards,
Only pension.
DeleteHello Sir,
ReplyDeleteI am working in a pvt ltd company for last 4yrs. Will be attaining 50yrs in 2020, but my service years will be only 7yrs. If I decide to quit the service after 50yrs, will I be able to withdraw from EPS fund, as I have not completed 10yrs of service. Kindly advice.
Regards
A.Chakkungal.
Dear Mr Chakkungal
DeleteYes, you are very much eligible for withdrawal of pension amount
Regards
Manoj Arora
Hi Sir,
ReplyDeleteUseful post. Consider my scenario please. My pbasic pay is Rs.80,000 and I have 5 years of services. What will be the EPS amount I will receive, if I resign now.
I can see that it will be Rs.15,000 * 5.02 = Rs.75,300 as 15k is the cap on EPS. Based on your post I am very enthused to see Rs.80,000 * 5.02 = Rs. 4,01,600. Can you please confirm this. Planning to jump into start-ups.
Thanks,
Vijay
Hi, still awaiting your reply
DeleteHi sir.am Arun.my father is working in daily thanthi for nearly 28 years.his basic salary is 17,000 and DA is 13,000.he will be going to retire on coming December of this month.so can u tell me how much pension he will get for a month.kindly reply me sir.
ReplyDeleteDear Paiya Arun,
DeletePension cannot be calculated just on the basis of last basic salary or DA. To estimate the pension, you need to first calculate what is called as 'Pensionable Salary'.
Pensionable Salary is arrived as the average of last 60 months annual contribution to EPS fund. If Rs. 17000 was his last basic salary and Rs 13,000 was his DA, he is likely to have contributed 8.33% of 12% of Rs 30,000 every month to his EPS fund. This comes out to approx Rs 300 per month or Rs 3600 per year (max limit is Rs 15000 per year).
Same way, you will have to look back at the basic salaries + DA of last 5 years and then take an average annual contribution to the EPS fund(as explained above).
Let us assume that your fathers 5 year average of the contributed salary (called as Pensionable Salary) comes out to be Rs. 3000 per year.
Pensionable Service in your case is 28 years.
So, Pension = (3000*28)/70 = Rs 1200 per month.
Let me know if you have any questions.
Regards
Manoj
Dear Sir,
ReplyDeleteHow can find PPO no. For private sector employee's.
Dear Sir,
ReplyDeleteIf any Employee having More than 20 years of service and his age is greater than 58 years. His last wage sealing is 15000/-. Does employee he will liable for the Pension.
My question is can he also get his 8.33% (Pension Amount) which is deducted in his 20 years of employment?
Email Id : pkjjangra@gmail.com
Dear Pankaj
DeleteI see no reason for not getting your pension. You should definitely get it. Please check your EPF statement issues by EPFO every year (or you may check it online as well). In that statement, you will find your EPS (penion) applicability as well.
Regards
Manoj
Dear sir,
ReplyDeleteI've taken pension scheme certificate after attaining service of 10 Yrs and 7 months (Oct2005- Apr2016), after calculating last 60 months of pensionable salary, it comes around Rs.1466/-PM. Now I'm employed in other organisation on same UAN no, my question is if I work here for next 4 years and took another scheme cirtificate, weather these 4 years would have count in continue with first scheme cirticate for calculation of last five year of pensionable salary.
DeleteNo pensioner can receive more than one EPF Pension. So if you have worked in multiple organizations you meed to consolidate all your EPS and then apply for EPS Pension. If you have multiple Scheme Certificate you need to submit all of those.
Regards
Manoj
Hi Sir,
ReplyDeleteWith humble respect.
I had worked in one organization 4.2years .shall I eligible for EPS.could you please suggest me regarding this and confirm how it will be calculated. Is there any deadline time or duration a employee should be work how many years.
Reagrds
Sarangi
Dear Sarangi,
DeleteIf you are registered with EPF in your organisation, you are automatically registered for EPS as well - assuming you joined prior to 2014. Unknowingly, you might already be contributing towards your EPS corpus.
However, an employee can start receiving regular monthly pension under EPS only after rendering a minimum service of 10 years - which you haven't done till now. If you continue / transfer your EPF account to the new organisation, your years of service will also continue and will be counted towards EPS contribution.
With just 4.2 years of service, you are not elegible for regular pension, but you can still withdraw your EPS funds. Please read the section "What Happens if you resign before completing 10 years of service?" in the post above.
Feel free to shoot any further questions.
Regards
Manoj
Will switching over to NPS be a better option?
ReplyDeleteDear Partha,
DeleteIt is difficult to compare EPS with NPS, in the sense that EPS is mandated for all employees who are enrolled with EPF scheme. Of course, those joining EPF Scheme after 2014 and are above the specific basic salary will not get enrolled in EPS.
Now, to save for your retirement, you have choices like increasing your EPF contribution, investing in PPF or in NPS. NPS still is not as tax efficient as EPF (Read more about NPS here: http://elevate-your-life.blogspot.in/2015/04/investing-in-new-nps-is-akin-to.html).
You can even get smarter by striving for financial freedom by creating a balanced portfolio of mutual funds, stocks, FDs, PPF, EPF etc which can give you a regular pension income, much like NPS or EPS, albeit with significantly higher returns.
Read this book, if you haven't : From the Rat Race to Financial Freedom.
Regards
Manoj
Hi,
ReplyDeleteIs it must to withdraw EPF ( Employer +Employee) after the retirement?
If not how long can we retain and how does it grow with time,
Thanks in advance for your infomation
Regards,
Nagaraja
Dear Nagaraja
DeleteNo, it is not mandatory to withdraw your EPF after retirement or quitting your job. There are various rules governing your EPF money after quitting your job.
Read them here:
http://elevate-your-life.blogspot.in/2017/11/epf-taxation-laws-post-leaving-your.html
Let me know if you have any further questions post reading the above article. Would be more than happy to help.
Regards
Manoj
Dear Manoj,
ReplyDeleteI am planning to close my EPF AND EPS account. I have 2year and 7 and half month of service.
My question is regarding EPS. In my last 3 month i was drawing half of the salary due to working 15 days a month because of parents illness. My question is will the EPS be calculated on the last drawn salary(i drew only 50 perct of salary for last 3 month due to unpaid leave deduction) or the regular salary which i was getting normally..
Thanks in advance.
Regards,
Nishant
Dear Nishant,
DeleteI am sure you are aware that any withdrawal before 5 years exposes you to income tax on your EPF/EPS amounts as per your current tax slab.
To your specific query on EPS, I am sure you are aware that the EPS contribution is dependent on your basic salary. 12% of your basic salary is contributed by your employer towards your EPF account - a part of which goes to EPS.
Just check in your salary statement if the basic salary is the same / reduced. If your basic salary has come down, so will your EPF and EPS contribution also.
Hope this helps
Regards
Manoj
sir my father was worked at private industry 1984 to 2003 , he passed at 2003 but my mother getting pension amount of 1700 , same pension amount only received till now .have any hike is possible ? am also got some amount of 425 pension its separately but it was stopped 2008 because of am completed 18 yr old . that amount added my mother pension or not ?
ReplyDeleteDear Sir,
ReplyDeleteI have total 6 years and 4 months private sector job experience. Between this I have changed two jobs. I have different UAN numbers for each company. My PF amount was not transferred from earlier company to current PF account due to different UAN number. And till date I do not withdraw my PF from any accounts. So, my question is what happened if I withdraw my earlier company PF amount? and how can I eligible for pension scheme? If i withdraw PF amount then whether pension scheme will be lapsed or continue?
Reply please, Sir.
Dear Patni
DeleteThere is a procedure to merge the two UANs. Please refer the procedure here: https://www.mymoneysage.in/blog/here-is-how-to-merge-multiple-epf-uan-numbers-or-deactivating-old-uan/
Regards
Manoj
Dear Sir,
ReplyDeleteThanks a lot for this informative article at length. I have recently quit my job after serving for 12 years and 11.5 months, on 16 Jan, 2018. My basic salary at present is 32000 and contribution to EPS has been consistent. I am now looking forward to start a small business of my own. After reading your article I would like to use this EPS benefit to the max possible. Would love to have your guidance.Please suggest the best thing to do.Is it possible to get in touch with you on personal level if this does not put you at inconvenience. Possibly through mails or WhatsApp. My mobile no is 9711147087. E mail ID is rajivkakkar3103@gmail.com.I shall be highly grateful to you.
Regards,
Rajiv Kakkar
Dear Rajiv
DeleteHaving worked for 13 years, you will not have the option to withdraw your EPS and use it for your business. Your only option is to get a monthly pension started via an annuity plan.
Regards
Manoj
Dear sir,
ReplyDeleteI had worked in a e-commerce company for last 2 years and after leaving the job i waited for 6months to get my pf. Now my question is simple will i get my complete pf including eps or just epf or if i get only epf then how to withdraw eps?
Regards kuldeep
You will have to apply for withdrawal of both EPF and EPS separately (via separate forms)
DeleteRegards
Manoj
Hello sir, I have resigned with this private firm and going to be completing 4.9 years when I get relieved. Will I be liable to take the pension contribution? Please advise sir?
ReplyDeleteYes, you can apply for EPS withdrawal. You are not eligible for regular pension since you have served less than 10 years.
DeleteRegards
Manoj Arora
Dear Sir.
ReplyDeleteI had worked in TLM trust India a Private Hospital and completed 58 yrs of my job as a technician.
I am very much confuse about my pension (How much I will get?)
I was joined my job in year of 1/1/1979.
My average salary of 6 month is Rs. 12500/-
So, according to EPS formula how much exactly I will get in to my monthly pension.
Hello Sir,
ReplyDeleteThanks for your valuable information.
I have question in my mind which I want to share it with you.
I am working in pvt sect since 18/10/2010 and my present basic salary is 12500 and monthly contribution since 2017 is rs. 1250 and my target to leave my job after completing 10 yrs (2020 or 2021). How much pension I will receive in future at age of 58 or 60.
Thanks
Rekha
i joined a govt undertaking in sep. 1982 and quit in June 1997. Then i went abroad for work and came back, joined an Indian private sector company in Dec 2002, I worked and worked there till June 2008 when I quit this second company. On quitting I joined another private Indian company in June 2008 and worked till Sep 2013. Now I would like to know whether i am eligible for EPS pension or not. If yes how can i proceed?
ReplyDeleteDear Sir,
ReplyDeleteThanks a lot for this informative article at length.
Sir I am working in Pvt sector my current Basic salarly is Rs 40000 PM July I am retiring what will be my pension
Dear Manmohan
DeleteRetirement Pension calculation is mentioned in the above article. The calculation needs more data than just your basic salary.
Regards
Manoj
Hi Prasad,
ReplyDeleteOnce the service period crosses 10 years, the withdrawal option of the EPS ceases - not that of the EPF - as mentioned by you in your question.
When will you get the amount? Reg EPF - you can withdraw immediately after retirement. Reg EPS - you cannot withdraw at all. You will be subscribed to a monthly pension based on your accumulated amount.
Reg EPF withdrawals - this can be done under very specific circumstances before retirement.
Refer the below link to resolve your multiple queries related to EPF.
Regards
Manoj
My querry is that,just like EPF which is accumulated and transfer when person resign from one company and join another,and it is Unique Identification number, similarly is it applicable on pension or not because by this the person not only loses its grautiy but also other financial losses
ReplyDeleteEPS (Pension) details gets automatically transferred when you transfer your EPF account to a new company. Gratuity is a different benefit and linked to EPS or EPF.
DeleteRegards
Manoj
Hi Sir,10years without gap in service required or If employee PF account without Withdrawal but gap in service will be acceptable.
ReplyDeleteHello
DeleteGap in service is acceptable as long as the same PF account is continued.
Regards
Manoj Arora
I have worked with 14 Yrs for Private sector. If i resign at the age of 40 than can I get EPS amount which is defecting in every month. Because it is more 18 yrs pending to get Pention if I cannot withdraw EPS.
ReplyDeleteI am working in getco gujarat for about 25yrs now i am resigning from the job and my age is 46yrs can i get my epfo amount back which is round about 2 lakhs what would you suggest to do in this case should i withdraw the amount if yes what is the procedure let me know
ReplyDeleteI worked for company for 17.6 years and then resigned and got Pension scheme paper from Govt. side and then again rejoined at the same company & obtained separate PF a/c. and continuing for last 6 years and will be continued for another 3 years - what is to be done to get my previous tenure and current tenure periodical services accumulation - any solution is there - my mobile no is 9830590188 - pl. reply on it
ReplyDeleteSir suppose a worker opts for early pension, which he is eligible, before 58 years, say at 56, after retirement. He will get around 92%of his eligible pension. But on completing 60 years of age, will he get his original eligible pension or he will continue to get only discounted pension.Pleade clarify
ReplyDeleteDear Sir,
ReplyDeletePlease be informed you that I am working last 9.6yrs in the private company and now i decided to quit my current job and do my own business. Kindly tell me, I am eligible for pension scheme and taking pension scheme certificate now is it ok
Yes please.
Delete