Employees’ Pension Scheme: According to the current rules of EPFO, the employee contributes 12 percent of his salary (Basic Salary + DA) to the EPF account every month. At the same time, the employer also puts the same amount in your provident fund account.
Employees’ Pension Scheme: Most of the employed people have a Provident Fund (EPF) account. Along with EPF, employees also have Employees’ Pension Scheme-EPS (Employees’ Pension Scheme) account. It is also called pension fund. Every month the pension amount is deposited in the employee’s account. This amount is deposited from the employee’s company account. But, often people remain confused as to when they can withdraw the EPS money. Withdrawal from EPS is allowed with certain conditions. Come, let’s know everything related to this…
How is money deposited in the Employees Pension Scheme?
According to the existing rules of EPFO, the employee contributes 12% of his salary (Basic Salary + DA) to the EPF account every month. At the same time, the employer also puts the same amount in your provident fund account. However, 3.67 percent of the employer’s contribution is deposited in the EPF and 8.33 percent in the Employees’ Pension Scheme. But, there is a cap of Rs 1,250 per month in this. Actually, 8.33% contribution in EPS is calculated at Rs 15000 (Basic+DA). However, the demand to remove this capping (limit) has been going on for a long time and hearing is going on in the Supreme Court.
Who can withdraw money from EPS account?
According to EPFO Retired Enforcement Officer Bhanu Pratap Sharma, lump sum money can be withdrawn from the EPS account only in two situations. As per the EPS rules, if the service history before leaving the job is less than 10 years or the employee turns 58 (whichever is earlier), then he can withdraw the pension fund money in lump sum. Even if you are 58 years old, there is an option of EPS scheme certificate instead of lump sum withdrawal. At the same time, the scheme certificate can be taken even when the employee has joined the job in some other organization or the service history has been more than 10 years, in such a situation the scheme certificate is issued.
How does EPFO calculate service history?
EPFO counts the years from the day you join the EPF scheme. However, it is not necessary that the service history should be continuous. Meaning if you joined the EPF scheme in 2010 while working in a company. Changed job after working here for 3 years (2013). But EPF benefit is not offered in other company, because that company does not come under the purview of EPF. The employee worked here for 4 years.
In 2017, you again changed the job and went to the third company, where the benefit of EPF scheme is available. In such a situation, the calculation of your service history in EPS withdrawal till the year 2021 will be based on the years spent in the first and third company. The history of other company in between will not be counted. Means your service history will be considered for a total of 7 years. In such a situation, you can withdraw money from lump sum pension fund.
How much money can be withdrawn from EPS account?
The less you are in the first 10 years of service (service history), the less amount you will be able to withdraw in lump sum. A lump sum withdrawal from the EPS scheme is allowed only if the service is less than 10 years or when retirement occurs at the age of 58. In case of less than 10 years, you can withdraw money on the basis of Table D given in EPS Scheme 1995.
EPS-95 Table D Withdrawal of Contribution on Leaving the Job
| Service History (years in service) | Salary share (Pension Fund) on leaving the job |
| 1 | 1.02 |
| 2 | 1.99 |
| 3 | 2.98 |
| 4 | 3.99 |
| 5 | 5.02 |
| 6 | 6.07 |
| 7 | 7.13 |
| 8 | 8.22 |
| 9 | 9.33 |
How to get pension certificate?
On completion of 10 years of service, the employee can take the pension certificate. In this certificate, pensionable service, salary and the amount of pension given on leaving the job are mentioned. If a person has a scheme certificate of service of 10 years or more, then he becomes entitled to monthly pension from the age of 58 under EPS. However, he also has the right to apply for early pension from the age of 50 years. However, the monthly pension at the age of 50 will be less than the pension received at the age of 58.
Will tax be deducted on EPS withdrawal?
According to AK Shukla, retired assistant commissioner of EPFO, lump sum withdrawal from EPS account comes under the ambit of tax. However, the situation is not clear in the Income Tax Act as to how much this tax will be or on what basis it will be deducted. In the event of leaving the job in the EPF scheme, the member has the option of withdrawing the entire amount and closing the account. On account closure (being unemployed for more than 2 months), full lumpsum withdrawal can be made from the EPF and EPS accounts (provided that the years of service are less than 10 years).
