What is the Employee Pension Scheme? Let’s get to know the scheme better!
Employees working in the organized sector spend a substantial amount of their precious time working in the sector and thus deserve some benefits to financially safeguard their life. That is when the Employee Pension Scheme (EPS) helps. Introduced in the year 1995, the scheme aims at aiding organized sector employees. It is interesting to note that all the employees eligible for the Employees Provident Fund (EPF) scheme will be eligible for the Employee Pension Scheme as well.
Understanding the Employee Pension Scheme (EPS) better!
The Employees’ Provident Fund Organization (EPFO) is the organization that makes sure that employees get a pension after they hit the age of 58. The benefits of the scheme are conferred to both new and existing members of the EPF. The system works in a nature that both the employer and the employee contribute 12 percent of the employee’s basic salary and dearness allowance to the EPF. While the entire part of the employee goes to the EPF, the employer’s contribution at a rate of 8.33 percent goes to the EPS. Once the employee retires, the plan offers a steady stream of income, which sets a firm foundation for the post-retirement lifestyle.
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Key features to talk about
The Employee Pension Scheme helps one lead a stress-free life, without worrying about the rainy days of old age. Here are some important features one must know about the EPS scheme:
- The Employee Pension Scheme (EPS) is sponsored by the Indian Government. This means that the returns are guaranteed. This also implies that there are absolutely no risks to investing in the EPS scheme. Additionally, the returning amount would be fixed and no alterations will be made.
- Employees who are earning a base salary along with DA of Rs.15,000 or less are required to register for the scheme.
- When does one become eligible to withdraw the EPS? At the age of 50. However, it is important to note that the amount one receives will be at a reduced rate of interest.
- If the widow/ widower receives the Employee Pension Scheme (EPS) amount, they will get the amount until her/his demise. Post the demise, the children will be receiving the pension amount till they touch the age of 25 years.
- In case the widow/widower remarries, the children would be classified as orphans. Thus, they would receive an additional amount of the pension.
- In situations where the child is physically challenged, they will receive the pension amount until her/his demise.
- Employees who are enrolled in the Employees’ Provident Fund (EPF) scheme would certainly be eligible for the Employee Pension Scheme (EPS).
- The minimum monthly pension amount that the individual will receive is Rs.1,000.
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Benefits to discuss
- The Employees’ Pension Scheme comes with a myriad of benefits. Let us know all of them, one by one.
- The Employees Pension Scheme (EPS) offers a fixed income post-retirement at the age of 58 years or post-early retirement at the age of 50 years.
- The scheme gives the permission to withdraw the entire pension sum at 58 years of age, in case the member leaves the service 10 years prior to the age of 58 years.
- The scheme is a breath of relief as it offers a monthly pension to individuals who become disabled completely and permanently despite not serving the pensionable tenure.
- The scheme offers a pension to the member’s family in the case of the death of the member prior to or after the pensionable service period.
