Know the calculation of pension after 10 years of service, details of widow and child pension – Variousinfo

Employee Pension Scheme (EPS) is an important social security scheme launched by the Government of India. This scheme has been designed to provide financial security to employees after retirement. Under EPS 95, both the employee and the employer contribute, giving the employee a regular pension after retirement.

In this article, we will learn about EPS 95 in detail – its eligibility, how the pension is calculated, what are the provisions for widow and child pension, and other important information related to this scheme. Whether you are an employee or an employer, knowing about EPS 95 will be very useful for you.

What is EPS 95?

EPS 95 i.e. Employees’ Pension Scheme 1995 is a government pension scheme which was started on 16 November 1995. The main objective of this scheme is to provide economic security to organized sector employees after retirement. EPS 95 is managed by the Employees’ Provident Fund Organization (EPFO).

Key Features of EPS 95

Eligibility for EPS 95

To get pension under EPS 95, certain eligibility criteria have to be fulfilled:

• You must be a member of EPFO
• Must complete at least 10 years of service
• Retirement age is 58 years
• Early pension can be taken from the age of 50 (at a lower rate)

Contribution to EPS 95

Both the employee and the employer contribute to EPS 95:

• Employee Contribution: 12% of Basic Salary + DA
• Employer’s contribution: 8.33% out of 12% goes to EPS
• Government contribution: 1.16% additional

Note that the maximum contribution limit is ₹15,000 per month.

EPS 95 pension calculation

Pension under EPS 95 is calculated on the basis of a formula. This formula is:

Pension = (Pensionable Salary x Pensionable Service) / 70

Here:

• Pensionable salary = Average salary of last 60 months
• Pensionable service = number of years of contribution to EPS

For example, if an employee has a pensionable salary of ₹15,000 and has 35 years of service, his pension will be:

(15,000 x 35) / 70 = ₹7,500 per month

widow pension

There is also a provision for widow pension under EPS 95. If an employee or pensioner dies, his wife/husband gets widow pension.

Main rules of widow pension:

• Minimum widow pension is ₹1,000 per month
• If the employee dies while in service, the full pension will be given.
• If the pensioner dies, he will get 50% of his pension.
• Widow pension is available for life or till remarriage.

child pension

There is a provision of pension for children also in EPS 95. If an employee or pensioner dies, his children receive child pension.

Main rules of child pension:

• Two children get pension at one time
• Children should be below 25 years of age
• Each child gets 25% of widow pension
• If the child is orphan, he gets 75% pension
• Disabled child gets 75% pension for life.

early pension

There is an option to take pension even before 58 years in EPS 95. This is called early pension.

Rules for early pension:

• Can be taken from the age of 50
• There is a reduction of 4% every year
• Example: There will be a 12% deduction on taking pension at 55 years.

Other important provisions of EPS 95

1. Minimum Pension: The minimum pension under EPS 95 is ₹1,000 per month.
2. Maximum amount of pension: There is no maximum limit on pension in EPS 95.
3. Commutation: A part of the pension can be taken as a lump sum.
4. Return of Capital: On the death of the pensioner, his nominee gets the remaining amount.
5. Disability Pension: If an employee becomes completely disabled, he starts getting pension immediately.

Benefits of EPS 95

1. Lifetime Income: Source of regular income after retirement
2. Family Security: Security to the family through widow and child pension.
3. Low contribution: The employee does not have to contribute separately
4. Government assistance: The government also contributes to the scheme
5. Flexibility: Early pension option available

Important questions related to EPS 95

1. Can contribution in EPS 95 be increased?
   Yes, an employee can contribute more than ₹15,000 with the consent of his employer.
2. Is EPS 95 refunded on changing job?
   No, EPS 95 money is not refunded. This gets transferred to the new job.
3. Is service before EPS 95 also counted?
   Yes, service before 16 November 1995 is also included in the calculation of pension.
4. Is EPS 95 pension taxable?
   Yes, the pension received from EPS 95 is taxable.
5. Does EPS 95 pension increase?
   Yes, from time to time the government increases the pension.

Some challenges related to EPS 95

1. Low pension: Many people believe that the pension received from EPS 95 is very low.
2. Contribution limit: The limit of ₹15,000 is low for many people.
3. Complex Rules: The rules of EPS 95 are quite complex and can be difficult to understand.
4. Delay in pension: Many times there is a delay in starting pension.
5. Lack of updation: The rules of EPS 95 have not been updated with time.

Raising awareness about EPS 95

EPS 95 is an important scheme, but many people do not have complete information about it. Therefore it is important to raise awareness:

• Employers should tell employees about EPS 95
• EPFO should disseminate more information
• Information about EPS 95 can be shared on social media
• EPS 95 can be introduced in schools and colleges

Future of EPS 95

There is room for improvement in EPS 95. Some possible changes may be:

• Contribution limit can be increased
• Pension amount can be increased
• Rules can be simplified
• Digital platform can be further improved

Disclaimer:This article is for general information purposes only. The information contained herein may not be completely accurate or up-to-date. Please consult a qualified financial advisor before making any financial decisions. The author or publisher will not be responsible for any loss or damage caused by the use of this information.