(EPS-95 Pension Scheme) : The Employees’ Pension Scheme (EPS-95) is a crucial social security initiative under the Employees’ Provident Fund Organization (EPFO). It aims to provide financial stability to employees after retirement by offering a steady pension. This scheme is particularly beneficial for employees in the private sector who may not have other pension benefits. Understanding EPS-95 can help individuals maximize their pension benefits and secure a comfortable post-retirement life.
In this article, we will explore the key benefits of the EPS-95 pension scheme, eligibility criteria, and the process to claim a pension ranging from ₹1,000 to ₹7,500 per month.
What is the EPS-95 Pension Scheme?
The EPS-95 (Employees’ Pension Scheme 1995) was introduced by the Indian government under the EPFO to provide financial security to employees post-retirement. The pension amount under this scheme depends on the employee’s service duration and last drawn salary.
Key Features of EPS-95:
- Managed by EPFO (Employees’ Provident Fund Organization)
- Designed for employees working in private and public sector organizations
- Provides lifelong pension after retirement
- Pensionable salary is calculated based on last 60 months’ average salary
- Employees must have served for at least 10 years to be eligible for a pension
- Pension starts at the age of 58 years (early withdrawal allowed at 50 with reduced benefits)
3 Major Benefits of the EPS-95 Pension Scheme
1. Lifetime Pension for Employees and Their Families
EPS-95 ensures financial stability after retirement by providing a monthly pension. In case of the pensioner’s demise, the benefits are extended to the spouse and dependent children.
Who Benefits?
- Employee: Receives a lifelong pension
- Spouse: Eligible for a widow/widower pension after the employee’s death
- Children: Dependents receive a pension until they reach 25 years of age
2. Minimum Guaranteed Pension
The government guarantees a minimum monthly pension of ₹1,000, ensuring financial security for low-income employees. Higher pensions are available for those who have contributed for longer durations with higher salaries.
3. Employer Contribution to Pension Fund
Employees do not need to make any separate contributions for the EPS-95 pension. The employer contributes 8.33% of the employee’s basic salary (up to ₹15,000) towards the pension fund. This ensures a steady post-retirement income.
See More : Government Raises Retirement Age
Eligibility Criteria for EPS-95 Pension
To be eligible for the EPS-95 pension scheme, you must meet the following conditions:
| Eligibility Factor | Requirement |
|---|---|
| Employment Type | Private & Public Sector Employees |
| EPF Membership | Must be an active EPF member |
| Minimum Service | 10 years of service |
| Age at Retirement | 58 years (can withdraw at 50 with reduced benefits) |
| Contribution Limit | Employer contributes 8.33% of salary |
| Early Withdrawal? | Yes, but with reduced pension |
How is the EPS-95 Pension Amount Calculated?
The pension amount under EPS-95 is determined using a standard formula:
Pension Amount = (Pensionable Salary × Pensionable Service) / 70
- Pensionable Salary: Average monthly salary of the last 60 months (capped at ₹15,000)
- Pensionable Service: Total years of service (minimum 10 years)
Here is a sample calculation of pension based on different service durations:
| Years of Service | Last Drawn Salary (₹) | Pensionable Salary (₹) | Estimated Monthly Pension (₹) |
|---|---|---|---|
| 10 years | 12,000 | 12,000 | 1,714 |
| 15 years | 15,000 | 15,000 | 3,214 |
| 20 years | 15,000 | 15,000 | 4,285 |
| 25 years | 15,000 | 15,000 | 5,357 |
| 30 years | 15,000 | 15,000 | 6,428 |
- If an employee has 30 years of service and a salary of ₹15,000, they can expect a monthly pension of ₹6,428.
- The minimum pension is ₹1,000, while the maximum can go up to ₹7,500 or more depending on years of service.
How to Apply for EPS-95 Pension?
Steps to Claim Your EPS-95 Pension:
- Check Eligibility: Ensure you meet the minimum 10-year service requirement.
- Fill Form 10D: This is the official pension claim form available on the EPFO website.
- Submit to Employer: The completed form must be submitted through the employer to the EPFO office.
- Attach Documents: Provide essential documents like Aadhaar, PAN, and bank details.
- Verification & Processing: EPFO verifies the details and processes the pension request.
- Receive Monthly Pension: Once approved, the pension is credited directly to your bank account.
Documents Required for EPS-95 Pension Application
| Document Name | Purpose |
|---|---|
| Aadhaar Card | Identity verification |
| PAN Card | Tax verification |
| Bank Account Details | Pension payment processing |
| Service Certificate | Proof of employment duration |
| Form 10D | Official pension claim form |
Can You Increase Your EPS-95 Pension?
Yes, employees can opt for a higher pension by contributing more towards EPS based on their actual salary. The Supreme Court ruling of 2022 allowed employees earning more than ₹15,000 to contribute a higher amount to get an increased pension.
How to Apply for Higher Pension?
- Submit a joint request with your employer to EPFO.
- Choose to contribute based on your actual salary (above ₹15,000).
- Provide consent for adjusting past contributions.
- Await approval and enjoy a higher pension post-retirement.
Pros & Cons of EPS-95 Pension Scheme
| Pros | Cons |
|---|---|
| Lifetime pension for retirees & families | Pension is lower compared to NPS/PF |
| Employer contributes (not employee) | Fixed formula, no investment growth |
| Minimum pension of ₹1,000 ensured | Capped at ₹15,000 salary limit |
| Available after just 10 years of service | Requires paperwork for pension claim |
The EPS-95 Pension Scheme is an essential financial safety net for private and public sector employees. With benefits like lifetime pension, employer contributions, and financial security for families, this scheme is a great way to ensure a stable post-retirement income.
Employees who maximize their contributions and complete more years of service can receive higher monthly pensions, ranging from ₹1,000 to ₹7,500 or even more. By understanding the eligibility, calculation, and claim process, employees can make the most of the EPS-95 scheme and secure their future.
For those looking to increase their pension, opting for higher contributions based on actual salary can be a game-changer.