EPS Rules: No need to wait till age 58, EPFO members can withdraw early pension – New Rule

 

The Employees Provident Fund Organisation (EPFO) in November 1995 launched a social security scheme – EPS 95 or Employee Pension Scheme 95 – for those working in the organised sector across private industries. Under the scheme, employees and their employers both contribute to the scheme, with the employee’s entire share going to provident fund and the employer’s contribution being divided into two parts. Of the employer’s share, 3.67% again added to provident fund managed and regulated as per EPF rules, while 8.33% is deposited for pension corpus under EPS 95. This EPS corpus made during the entire service period ensures a fixed pension after you retire.

But to become eligible for a pension under the EPFO scheme, you need to contribute to the scheme for at least 10 years. Once you complete 10 years in service and as an EPFO member, it becomes certain that you will receive a minimum pension as per the EPFO rules. At present, the minimum pension under the EPFO is Rs 1,000 and the maximum is fixed as Rs 7,500. In this story, we will understand if there is a possibility to withdraw early pension before reaching the age of 58.

EPFO members can withdraw an early pension, provided they fulfill certain conditions. The first requirement is the employee must have completed at least 10 years as an EPFO member and is aged 50 or older but under 58. If the member meets the criteria, he or she becomes eligible to apply for an early pension. However, you must remember that withdrawing a pension before reaching the age of 58 results in a reduction of the pension amount. The reduction is calculated at a rate of 4% for each year the member’s age is below 58.

Also, if you delay your pension withdrawal until age 60, you become eligible for full EPS pension, which rises by 4% annually.

EPFO members are allowed to withdraw an early pension if they have completed 10 years of service and are between 50 and 58 years old. However, if they choose to withdraw early, their pension gets lowered by 4% for each year they are younger than 58

Types of pensions under Employees’ Pension Scheme

The Employee Pension Scheme (EPS) offers various types of pensions to support the family members of EPF subscribers. These pensions are called – widow Pension, child pension, orphan pension and reduced pension.

As the names suggest, widows of EPF members are eligible for widow pension and children of the EPF member who passes away get pension. Orphan pension is given to the children of the EPF member as there is no surviving widow.

Reduced pension is given to those employees who have served for more than 10 years but not completed the full pensionable service till age 58.

Types of pensions under Employees’ Pension Scheme

The Employee Pension Scheme (EPS) offers various types of pensions to support the family members of EPF subscribers. These pensions are called – widow Pension, child pension, orphan pension and reduced pension.

As the names suggest, widows of EPF members are eligible for widow pension and children of the EPF member who passes away get pension. Orphan pension is given to the children of the EPF member as there is no surviving widow.

Reduced pension is given to those employees who have served for more than 10 years but not completed the full pensionable service till age 58.