Launched in 1955, the Employee Pension Scheme (EPS) is an investment tool that allows private as well as government employees to enjoy pension after retirement. The scheme is provided by the Employees’ Provident Fund Organisation (EPFO) and is especially great for investors with low or medium risk appetite.
Eligibility Criteria of Employee Pension Scheme:
To be eligible for benefits under the Employees’ Pension Scheme (EPS), you must fulfil the following criteria:
You should be a member of EPFO
You should have served or worked for at least 10 years
You should be at least 58years old.
You can also withdraw your EPS at a reduced rate once you reach the age of 50.
You can also postpone your pension for two years i.e. up to the age of 60. After which you will receive a pension at a 4% increase for each year.
In the event of an employee’s death while on active duty, his or her family becomes eligible for Pension payments.
How to calculate your pension under EPS?
After retirement, an employee’s monthly EPS or pension amount is determined by his or her pensionable service and pensionable salary. It is calculated using the following formula:
Employee’s Monthly Salary = (Pensionable Salary x Pensionable service) / 70
Pensionable Salary:
The pensionable salary is the average monthly income earned by the employee in the last 12 months before exiting the Employee Pension Scheme in India. Any non-contributory days in the last 12 months will not be counted, and the employee will be paid for that month.