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Employee Pension SchemeEmployee Pension Scheme



Employee Pension SchemeEmployee Pension Scheme

The purpose of the scheme is to provide for

superannuating pension, retiring pension or permanent total disablement pension to the

employees.

Widow or widower·s pension, children pension or orphan pension payable to the

beneficiaries employees.

Salient Features of the Employees Pension Scheme 1995 (EPS-95).

This scheme is applicable to all members who are covered under Provident Fund Act after

15.11.1995

It replaces the previous Employees Family Scheme 1971

If member is alive, pension to member

If member is not alive, Pension to spouse and two children below 25 years of age

Applicable to all PF subscribers including exempted establishments contributing to EPS

Scheme.



Funding of the Pension SchemeFunding of the Pension Scheme

An amount equal to 8.33% of pay or Rs 541/- ( whichever is lesser) is pooled into the EPS from theEmployer's contribution.

Example:- If a PF member gets Rs. 1000/- as monthly wages and he and his employer contributes

12% each (Total of Rs. 240)

Rs. 120 + Rs.37 =157 goes to Provident Fund and Rs. 83 goes to Pension Fund.

The Central Government will also contribute at 1.16 % of the pay of the member.

Pay" means basic wages, with dearness allowance, retaining allowance and cash value of food concessions

admissible, if any

Eligibility to under EPS schemeEligibility to under EPS scheme

Minimum 10 years eligible service will entitle for member pension. The aggregate of actualservice and the 'past service' shall be treated as eligible service. The fraction of service for six

months or more shall be treated as one year and the service less than six months shall be ignored.



Calculation of PensionCalculation of Pension

Monthly Member PensionMonthly Member Pension::--

Pensionable SalaryPensionable Salary XX Pensionable ServicePensionable Service

7070

MaximumMaximum PensionablePensionable service for the calculation of service is 35 yrs. If a memberservice for the calculation of service is 35 yrs. If a member

has maximum service, pension will be:has maximum service, pension will be:

Pensionable SalaryPensionable Salary

22

Those who joined BEFORE 15.11.1995 ( pension is also payable for membership period under ceased FPS71 as

past service benefit based on factor formula of table & schedule B)

** Pensionable SalaryPensionable Salary -- it means the average salary of the member drawn during the last 12 months.Theit means the average salary of the member drawn during the last 12 months.Themaximum limit of pensionable salary is Rs. 6500/maximum limit of pensionable salary is Rs. 6500/--PM. i.e. If an employee received Rs. 10,000/PM. i.e. If an employee received Rs. 10,000/-- PM as basicPM as basicsalary, for the purpose of calculating pension under FPS, the basic salary is considered to be Rs. 6500/salary, for the purpose of calculating pension under FPS, the basic salary is considered to be Rs. 6500/-- PMPM

* * Pensionable ServicePensionable Service ²² it means service of the member for which contribution for the pension fund isit means service of the member for which contribution for the pension fund ismade. In the case of the member who superannuates on attaining the age of 58 years, and/or who hasmade. In the case of the member who superannuates on attaining the age of 58 years, and/or who hasrendered 20 years pensionable service or more, his pensionable service shall be increased by adding arendered 20 years pensionable service or more, his pensionable service shall be increased by adding aweightage of 2 years.weightage of 2 years.



Types of Monthly PensionTypes of Monthly Pension

Member PensionMember Pension::-- On superannuation / Retirement/ Short service.On superannuation / Retirement/ Short service.

Disablement PensionDisablement Pension::-- On permanent and total disablement during employmentOn permanent and total disablement during employment

Widow PensionWidow Pension::-- After death in service or death after retirement of the member from theAfter death in service or death after retirement of the member from the

company. (company. (50% of monthly members pension subject to a minimum of Rs. 250/50% of monthly members pension subject to a minimum of Rs. 250/-- PM)PM)

Children PensionChildren Pension::-- After death in service or death after retirement of the member from theAfter death in service or death after retirement of the member from the

company, children pension is given two children (company, children pension is given two children (25% of the widow pension subject to a minimum25% of the widow pension subject to a minimum

of Rs. 115/of Rs. 115/-- PM)PM) in addition to widow pension. If there is no widow pension, children arein addition to widow pension. If there is no widow pension, children are

entitled for orphan pensionentitled for orphan pension ( 75% of widow pension subject to a minimum of Rs. 170/( 75% of widow pension subject to a minimum of Rs. 170/--PM)PM)

Return of CapitalReturn of Capital ::-- Reduced pension and avail of return of capital under any threeReduced pension and avail of return of capital under any three

alternatives given in the page ( slide number 10) .alternatives given in the page ( slide number 10) .

Nominee PensionNominee Pension::-- upon death of the members having no family, pension will paid to theupon death of the members having no family, pension will paid to the

nomineenominee (Equal to that of widow pension )(Equal to that of widow pension )



Superannuation PensionSuperannuation Pension

If age is 58 years or moreIf age is 58 years or more

20 years or more service20 years or more service

Retirement PensionsRetirement Pensions

If age is between 50 and 58 yearsIf age is between 50 and 58 years 20 years or more service20 years or more service

Short Service PensionShort Service Pension

10 to 20 years of service10 to 20 years of service

Disability PensionDisability Pension

Permanently and totally unfit for the employment which the memberPermanently and totally unfit for the employment which the member

was doing at the time of such disablement .was doing at the time of such disablement .

Membership with one months contribution to the pension fund isMembership with one months contribution to the pension fund is

enough.enough.

Quantum of pension as per pension formula subject to minimum Rs.Quantum of pension as per pension formula subject to minimum Rs.

250/250/-- PMPM

Monthly member Pension EligibilityMonthly member Pension Eligibility



If the member completes 20 years, the Monthly Member PensionIf the member completes 20 years, the Monthly Member Pension

Pensionable SalaryPensionable Salary XX Pensionable ServicePensionable Service

7070

If the member completes less than 20 years, the monthly member pension The amount arrived as per theIf the member completes less than 20 years, the monthly member pension The amount arrived as per the

above formula, shall be reduced at the rate of 6% for every year by which the eligible service falls short ofabove formula, shall be reduced at the rate of 6% for every year by which the eligible service falls short of

20 years, subject to a maximum reduction of 25%20 years, subject to a maximum reduction of 25%

The member can continue in service while receiving this pension On attaining 58The member can continue in service while receiving this pension On attaining 58

Years of age, a EPF member cease to be a member of EPS automaticallyYears of age, a EPF member cease to be a member of EPS automatically

The member need not be in service if he completes 10 years service in FPSThe member need not be in service if he completes 10 years service in FPS

Monthly member Pension CalculationMonthly member Pension Calculation



Situation ISituation I --

Death of the member/ Death while in service :Death of the member/ Death while in service :--((Widow Pension & ChildrenWidow Pension & Children

Pension/ Orphan Pension/ Nominee Pension)Pension/ Orphan Pension/ Nominee Pension)

Member should complete at least one month's serviceMember should complete at least one month's service

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

other conditions .other conditions .

In this case children pension / orphan pension is payable to maximum of 2 childrenIn this case children pension / orphan pension is payable to maximum of 2 children

upto 25 years. ( In case more than two children the eligibility of pension will runupto 25 years. ( In case more than two children the eligibility of pension will run

from the eldest to the younger child in order).from the eldest to the younger child in order).

Family PensionFamily Pension -- EligibilityEligibility



Situation IISituation II

Death of the member Death whenDeath of the member Death when NOTNOT in service:in service:--((Widow Pension &Children Pension /Widow Pension &Children Pension /

Orphan Pension/ Nominee Pension)Orphan Pension/ Nominee Pension)

If a member dies even when not in service, holding a valid scheme certificate and not completedIf a member dies even when not in service, holding a valid scheme certificate and not completed

58 years of age.58 years of age.

If unmarried, pension to nominee or to dependent parent is payable only when the member hasIf unmarried, pension to nominee or to dependent parent is payable only when the member has

rendered 10 years of servicerendered 10 years of service

Situation IIISituation III

Death of the employee While getting Pension from FPS :Death of the employee While getting Pension from FPS :--((Widow Pension &Children Pension /Widow Pension &Children Pension /

Orphan Pension/ Nominee Pension)Orphan Pension/ Nominee Pension)

Widow PensionWidow Pension -- 50% of the monthly member pension subject to minimum Rs. 250 /50% of the monthly member pension subject to minimum Rs. 250 /-- PMPM

Children PensionChildren Pension -- 25% of the monthly member pension to each children (maximum number 2)25% of the monthly member pension to each children (maximum number 2)

upto attaining 25 years of age.upto attaining 25 years of age.

Nominee PensionNominee Pension -- Equal that of widow pension.Equal that of widow pension.

Family PensionFamily Pension -- EligibilityEligibility



Options for Return of CapitalOptions for Return of Capital

Alternative 1Alternative 1

Revised pension during life time of member with return of capital on his death.Revised pension during life time of member with return of capital on his death.


Revised pension during life time of member, further reduced pension during life time of Revised pension during life time of member, further reduced pension during life time of

the widow or her remarriage whichever is earlier and return of capital on widow·sthe widow or her remarriage whichever is earlier and return of capital on widow·s

death / remarriagedeath / remarriage


Pension for a fixed period of 20 years not with standing whether the member lives forPension for a fixed period of 20 years not with standing whether the member lives for

that period or notthat period or not

The employee is eligible to pension may opt to draw for reduced pensionand avail of return of capital under any one of the three alternatives given

below.



Example of CalculationExample of Calculation

Date of BirthDate of Birth :± 31.1.1947

Completed 58 Years onCompleted 58 Years on :- 31.1.2005

Age as on 16.11.95Age as on 16.11.95 :- 48 years

FPF MembershipFPF Membership :- 18 Years ( assumed membership of FPF w.e.f 1977)

EPS 95 MembershipEPS 95 Membership :- 10 Years

Pay as on 16.11.95Pay as on 16.11.95 :- above Rs 2500/-

Past service benefitPast service benefit :- Rs. 135 X 5.301 = Rs.715.635(Factor formula of table & schedule B of the previous EFPSFactor formula of table & schedule B of the previous EFPS -- 1971)1971)

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

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

= Rs.1644.205= Rs.1644.205



Example of CalculationExample of Calculation

Date of BirthDate of Birth :- 11.7.1951

Completed 58 Years onCompleted 58 Years on :- 10.7.2009

Age as on 16.11.95Age as on 16.11.95 :- 34years

FPF MembershipFPF Membership :- 15 Years ( assumed membership of FPF w.e.f 1980)

EPS 95 MembershipEPS 95 Membership :- 13 Years

Pay as on 16.11.95Pay as on 16.11.95 :- above Rs 2500/-

Past service benefitPast service benefit :- Rs. 105 X 3.292 = Rs.345.66(Factor formula of table & schedule B of the previous EFPSFactor formula of table & schedule B of the previous EFPS -- 1971)1971)

Pension payablePension payable =Rs. 345.66 + ( Rs.6500 X13/70)=Rs. 345.66 + ( Rs.6500 X13/70)

= Rs. 345.66+ Rs.1207.14= Rs. 345.66+ Rs.1207.14

= Rs.1552.80= Rs.1552.80



Schedule B of the previous EFPSSchedule B of the previous EFPS -- 19711971

(n

¡ AC¢

£ ¤ (n

¡ AC¢

£ ¤

(1

(2

(1

(2

L ¥ ss ¦ h § n 1 1 ̈ 049 L ¥ ss ¦ h § n 13 3 ̈ 292

L ¥ ss ¦ h § n 2 1 ̈ 154 L ¥ ss ¦ h § n 14 3 ̈ 621

L ¥ ss ¦ h § n 3 1 ̈ 269 L ¥ ss ¦ h § n 15 3 ̈ 983

L¥ ss

¦ h

§ n 4 1

̈396 L

¥ ss

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§ n 16 4

̈381

L ¥ ss ¦ h § n 5 1 ̈ 536 L ¥ ss ¦ h § n 17 4 ̈ 819

L ¥ ss ¦ h § n 6 1 ̈ 689 L ¥ ss ¦ h § n 18 5 ̈ 301

L ¥ ss ¦ h § n 7 1 ̈ 858 L ¥ ss ¦ h § n 19 5 ̈ 81

L¥

ss¦

h§

n 8 2 ̈

044 L¥

ss¦

h§

n 20 6 ̈

414L ¥ ss ¦ h § n 9 2 ̈ 248 L ¥ ss ¦ h § n 21 7 ̈ 056

L¥ ss

¦ h

§ n 10 2

̈473 L

¥ ss

¦ h

§ n 22 7

̈761

L ¥ ss ¦ h § n 11 2 ̈ 72 L ¥ ss ¦ h § n 23 8 ̈ 537

L ¥ ss ¦ h § n 12 2 ̈ 992 L ¥ ss ¦ h § n 24 9 ̈ 39



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