Employee Pension Scheme: Eligibility And Features
The history of pension plans in India dates back to when the Britishers ruled our country. After the revolt of 1857 of the Indian Independence struggle, the British government introduced the Employee Pension Scheme. It was the reflection of the Britisher’s pension system.
The Britishers decided to provide financial support to professionals for their post-retirement life. But this was a gimmick! The Viceroy and Governors were only authorized to take the final decision. The employees or the pensioners were at the mercy of these officials.
The British Government compensated the pensioners occasionally via pension increments that neutralised the inflation effect. Yes, the retirement benefits were formulated by the GOI but were not included in the Fundamental Rules.
Current Employee Pension Scheme
India after its independence framed the Central Civil Services (Pension) Rules, 1972. With time, many changes are made to this Rule.
Gratuity plans, provident funds, and pensions are some of the best retirement available in India nowadays. The government has effectively assisted senior citizens through below mentioned programs. They are:-
In fact, the Indian Government has introduced pension schemes for elderly artists and people in Assam.
Here we will be talking about the Employee Pension Scheme.
What is an Employee Pension Scheme?
Employee Provident Fund, technically known as Employee Pension Scheme was introduced for the benefit of senior citizens. This social security scheme is given by EPFO.
This scheme gives provision for unorganized sector employees to get a pension after 58 years of age. The benefit of this scheme will only be given to those employees who have served at least 10 years of service. Employee Pension Scheme came into being in 1995 and allowed new and existing EPF members to join the scheme.
Both (Employer+ Employees) have to give a contribution of 12% of the basic salary and DA of the employees’ wages. The complete contribute contribution of employees goes to the EPF account. While the employer’s contribution, i.e 3.67% goes to the EPF account. The balance contribution (8.33%) goes to EPS.
Eligibility Of Employee Pension Scheme
You need to fulfil these eligibility criteria to take advantage of the Employee Pension Scheme:
- You must be a part of EPFO.
- The minimum age at which beneficiary can receive their pension is 50 years. In the case of a regular pension, the age is 58 years.
- In any case, the pension defers for two years until the employee reaches 60 years, they will receive the pension. They will get this at a rate of 4% per year.
- The beneficiary must have experience of at least 10 years of service.
Features of the Employee Pension Scheme
The features of the Employee’s Pension Scheme are as follows:
- Employee Pension Scheme is sponsored by the government of India. Hence, there are no risks associated to invest in this scheme. The amount is defined and returned without any changes.
- Any employees who get Rs. 15,000 of the DA & base salary or less are mandated to enrol. The EPS can be withdrawn once they attain 50 years of age. However, the amount will be given at a reduced rate of interest.
- If the widow or widower marries again, the children will be considered orphans. They will get an additional amount of pension.
- The professionals enrolled in the scheme of EPF will be enrolled automatically in the EPS scheme.
- The minimum amount of pension that an individual will get on a monthly basis is ₹1000.
- If the child is physically challenged, he/she will get a pension until death. The widow/ widower will get the amount of EPS until his /her death. The children will be given a pension after the death of both partners until 25 years.
Types of Employee Pension Schemes
1. Widow Pension
The widow of the pensionable person is eligible for Vridha Pension or Widow Pension. This member will get a pension until her death or remarriage. The pension will be given to the eldest widow if the eligible individual has more than 1 widow.
2. Orphan Pension
The Orphan Pension scheme is valid only in the case when the pensionable member and widow are not alive. In such cases, the two surviving children get a 75% widow’s pension on a monthly basis. This scheme is applicable only to two surviving children.
3. Child Pension
In case the qualifying member for pension dies, the child pension will be given to the surviving children. This pension is given in addition to the monthly widow Pension and will be valid for two children utmost.
4. Reduced Pension
Those beneficiaries who are less than 58 years can get an early pension in case they:-
- They have completed 10 years of service
- Are at least 50 years of age.
In the above-mentioned case, the pension is reduced at a rate of 4 % for each year.
Benefits of the Employee Pension Scheme
Some of the benefits offered by the Employee Pension Scheme are as follows:
- Offers a pension to the family of the applicant in case of his/her death. The pension will be given even if the applicant dies before or after the pensionable period.
- Gives a fixed income once the individual has retired at 58 years of age. It will also be offered as an early retirement at 50 years.
- If the applicant leaves service 10 years before the completion of 58 years, he/she can withdraw the complete pension amount.
- Provide pension to those members who become completely disabled without serving the pensionable service period.