Summary

India’s growing and diverse workforce requires workers to focus on post-retirement security because their future after ending work represents their main concern. The managers at the Employees' Provident Fund Organisation (EPFO) operate the Employee Pension Scheme (EPS) to deliver retirement security to workers. The retirement pension scheme named EPS began operations in 1995 to provide monthly payments to employees starting at age 58 and lasting throughout their retirement period.

Employee pension Scheme

In this insight, you will learn about the Employee Pension Scheme 2025 by revealing its fundamental elements and the requirements for eligibility and the payment methods alongside pension benefits, along with instructions for balance checking. 

This insight serves both retirement-nearing individuals and beginners who want to understand EPS functionality.

What is an Employee Pension Scheme (EPS)?

Under the administration of the Employees' Provident Fund (EPF), workers benefit from the Employer Pension Scheme (EPS) as a retirement funding arrangement. The EPFO governmental body manages the pension scheme and provides monthly retirement benefits to qualified employees who reach age 58. As part of the Employees’ Provident Fund Scheme, the scheme maintains three separate funds, which include the Provident Fund (PF), Pension Fund (PF) and Insurance Fund (IF).

Key Highlights:

  • The retirement benefit of the monthly pension starts upon reaching age 58 or the early option at age 50.
  • The pension benefit eligibility depends on employment duration, where 10 years of consistent work is mandatory.
  • Both workers, through their employer payments and their pay stubs, make contributions to EPF at preset percentages of their basic wages.
  • The pension scheme receives a specific part from this money allocation.

Types of Pensions Under EPS

The EPS provides pension benefits based on how an employee and their family are situated. 

The different pension profiles include:

1. Orphan Pension

The orphan pension benefit equals seventy-five percent of the monthly pension and applies to surviving children when an employee dies without leaving a surviving spouse. The payment benefits start with the eldest surviving child, followed by two children who can receive this benefit.

2. Widow and Widower Pension

A surviving spouse of an employee who has passed away is entitled to receive a monthly pension benefit. The pension benefit requires the employee to have at least one month of service before qualification.

3. Child Pension

The beneficiary program also includes financial support through child pensions to surviving children after the death of a spouse. The pension system provides 25% of widow pension money until the child becomes 25 years old or beyond in cases when the child has physical disabilities.

4. Reduced Pension

Mercantile Marine Office members receive an early pension option if they exceed 50 years of age unless their service period totals fewer than 58 years. The pension receives a yearly decrement of 4% for every year the member worked less than fifty-eight years.

Eligibility to get EPS Benefits

RequirementDetails
Membership with EPFOEmployees must enroll as a member of the Employee Provident Fund Organization (EPFO).
Age Requirement for Early PensionEmployees must be at least 50 years old to qualify for early pension benefits.
Age Requirement for Regular PensionEmployees must be at least 58 years old to qualify for regular pension benefits.
Minimum Service TimeEmployees must provide continuous service for at least ten years to qualify for pension benefits.
Pension Enhancement After Age 60If pension benefits are claimed after age 60, there is an annual pension enhancement of 4%.

Features of the Employee Pension Scheme

The Employee Pension Scheme provides various platform features that serve as attractive benefits for employee retirement planning.

  • Indian government support gives this scheme guaranteed returns, which eliminate all investment risks.
  • All employees who belong to the EPF system automatically become part of the EPS.
  • The Employee Pension Scheme establishes Rs. 1,000 as the least amount of monthly pension benefits.
  • The retirement plan offers family pension coverage, which delivers payments to surviving relatives after member death. Member spouses, along with widows and children, qualify to maintain their pension payments with specified pension terms.

Benefits of Employee Pension Scheme

The Employee Pension Scheme delivers various benefits that establish financial stability for workers and their dependent families:

  • The Employee Pension Scheme provides monthly retirement pay starting at age 58 but employees taking early retirement at age 50 can also qualify.
  • Disabled members of the scheme receive pension benefits no matter when their disability becomes permanent because they qualify regardless of their pensionable service.
  • Under Family Pension, the surviving members of pensioned members can obtain benefits, including their spouses along with their children.
  • The Income Tax Act grants tax benefits to EPS members because tax deductions apply to their pension fund contributions through Section 80C.

Contribution to Employee Pension Scheme

Employees join together with their employers to make payments to the Employee Pension Scheme as part of the Employee Provident Fund.

The pension scheme does not receive direct employee contributions, although the Employee Provident Fund payment supports its operations through specific allocation.

The employer needs to contribute 12% of the worker's basic pay together with the dearness allowance amount. 8.33% of the total amount is reserved for the Employee Pension Scheme.

Government contribution to the scheme amounts to a minimal percentage of 1.16% annually.

How to Check Your EPS Balance

Your access to check your EPS balance becomes possible only after activating your Universal Account Number (UAN). With portal activation complete, you can verify your balance using the same platform at any time.

Steps to Check EPS Balance:

StepDescription
1Activate UANYour access to check the EPS balance becomes possible only after activating your Universal Account Number (UAN).
2Visit EPFO WebsiteGo to the official EPFO website: epfindia.gov.in.
3Navigate to "For Employees."Search for the "For Employees" subpage inside the "Our Services" directory on the website.
4Access "Member Passbook."From the website, select “Member Passbook,” and log in with your UAN, password, and CAPTCHA code.
5View EPS BalanceAfter logging in, you will be able to view your pension contribution details and the complete EPS account balance.

Calculation of Monthly Pension

Employees receive their pension amount based on how long they worked and their pensionable salary. Different calculation approaches exist for employees who participated in the scheme before 16th November 1995 and for those who joined after this date.

The amount of pension depends on service length combined with professional income for all members before 16 November 1995.

The method to determine the pension utilizes the following formula after 16 November 1995: EPS = (Service Period × Pensionable Salary) / 70.

EPS = (Service Period × Pensionable Salary) / 70

The pensionable salary stands as the average salary accumulated within the previous 5-year span of service.

EPS Withdrawal Process

If You Have Worked for Less Than 10 Years:

Employees without 10 years of service can collect their EPS fund by completing Form 10C. You can withdraw EPS funds only after leaving your workplace, where activation of UAN through KYC submissions becomes necessary.

If You Have Worked for More Than 10 Years:

An employee with more than ten years of work experience cannot withdraw their EPS benefits; however, they can obtain an EPS Scheme certificate from Form 10C.

How much pension will I get from EPS?

If you're enrolled in the EPF scheme, you'll also be automatically enrolled in the EPS scheme. The minimum monthly pension you can receive is Rs. 1,000.

Is EPS Better Than NPS?

Choosing between EPS and NPS depends on your investment goals. If you want a long-term investment that includes both equity and debt options, NPS could be a good choice. On the other hand, if you're looking for stable returns for your retirement, EPS might be a better fit.

How do I know if I am a member of the EPS scheme?

To check if you're a member of the EPS scheme, look for your member ID, which is the same as your EPF account ID. You can find this ID on the UAN portal or the UMANG app.

Can I withdraw my EPS amount?

Yes, you can withdraw your EPS once you turn 50.

Who is eligible for EPS?

To be eligible for EPS, you must be a member of EPFO. If you want to get an early pension, you need to be at least 50 years old. For a regular pension, the minimum age is 58. You also need to have worked for at least 10 years to qualify for the benefits.

Is EPS taxable?

Yes, the pension received from EPS is taxable based on the employee's income tax slab.

Planning for a comfortable retirement starts now, and the Employee Pension Scheme (EPS) 2025 offers the best solution for your post-retirement financial security. Whether you're nearing retirement or just starting your career, it's essential to understand how EPS works and how you can leverage its benefits.

Don't wait until it's too late! Visit the EPFO website today, activate your UAN, and start planning for a secure, financially stable future.