July 31, 2016

EPF Pension Scheme Rules - Brief details

The EPF pension scheme is mandatory for every employee who is getting basic pay up to Rs. 15000. The employer contributes 8.33% of your basic salary which means maximum contribution of Rs. 1,250 can be deposited by your employer on every month even the employee is earning more than the wage ceiling. The employer also needs not to contribute more than 8.33%. The wage ceiling for employees was Rs. 6500 before 1 September 2014. The members will start receiving pension only after attaining retirement age 58. The company which comes under EPF Act can commence a pension account for employee from the first month of joining.

The subscriber should nominate 1 person from family members to receive the pension in case of death. The member can be a spouse, children, father or mother. The relationship like brother and sister is not allowed for nomination. If you are unmarried you can nominate your father or mother. The subscriber can nominate their spouse after getting married. After nominating your spouse the old nomination will become invalid.

EPS amount withdrawal is possible when an employee is unemployed for 2 month from the date of relieving at the same time the total number of contributions should not exceed 10 years. The members will not earn interest while withdrawing accumulated EPS amount. If the subscriber wishes to continue EPS can obtain the scheme certificate from EPFO office mentioning with total number of years contribution. The scheme certificate can be produced to another employer to count the previous service even though if there is some break in service. The members also not eligible to receive more than one pension under EPS scheme formulated under the Government of India.

The formula for calculating pension is: Monthly pension = (Pensionable Salary x Pensionable Service) / 70. Here, Pensionable salary is average of last 60 months salary that received before retirement. Remember, limit of employer contribution for pension may be increased when year passes away, the labor ministry might announce higher percentage in future. It is advised to keep going with EPS scheme without premature withdrawal. The government of India has set minimum pension Rs. 1000 per month. However, unions have been already demanding Rs. 3000 per month as minimum benefit. Form 10C should to be submitted to claiming EPS and scheme certificate.

Employees Provident Fund Organisation (EPFO) may soon introduce changes in EPS (Employees Pension Scheme) 1995 that employees too can contribute for pension scheme. The retirement body is now considering the proposal of voluntary contribution for adding extra benefits over EPS. It is a long-waited dream of every employee by annexing more money for peaceful retirement. As per the existing policy the employers must contribute towards EPS on behalf of employee apart from EPF contribution. The forthcoming amendments will definitely inspire new account joiners and encourage the existing members to come forward themselves to enhance the existing limitation. Once the proposal is favored by the panel, the announcement will pave the way to subscribe higher pension after retiring from employment. The investors are already aware of investments on EPS will continue be stagnant even inflation reflects on economy.