Supreme Court of India on April 1 2019 had dismissed the special leave petition (SLP) filed by the EPFO challenging the decision by the High Court of Kerala regarding the Employees’ Pension Scheme (EPS). As per the Supreme Court website, the EPFO has now challenged the judgment on April 30,2019, the status of which is being shown as ‘Pending’.
With this, the Supreme Court judgment on EPS may get further prolonged. The contentious circular was first introduced in 2014 and there have been several court cases since then.
Here, we see the rules and what happens to the EPS money and also how to transfer the EPS on changing jobs.
For salaried individuals, pension is one of the sources of income that help them take care of the financial needs during retirement. While the Employee Provident Fund (EPF) helps to create a retirement corpus after several years of job, the Employees’ Pension Scheme 1995 (EPS) helps in getting a regular stream of income called pension or annuity in the post-retirement phase. Both, EPF and EPS and governed and managed by the Employees Provident Fund Organization (EPFO).
Unlike the EPF funds ( including contribution and interest) which one can withdraw at the time of leaving a job, the contribution towards EPS may not be paid to the employee leaving the job. As per the EPS rules, the EPS funds can be had as a lump sum only if the employee leaving a job has rendered a continuous service of less than ten years. Once the service period crosses ten years, the employee will mandatorily become eligible to receive a pension.
JOB LESS THAN 10 YEARS
If the service period is less than 10 years ( at least six months), one may withdraw EPS funds or he or she can choose to opt for ‘Scheme Certificate’, which means EPFO will keep a record of the EPS contributions and the period of service and the employee can have a regular pension from EPFO after retirement.
Withdrawing EPS: To withdraw the EPS funds, one needs to fill the Form 10C. Those employees who have submitted details as per ‘Form 11-New’ and has furnished the Aaadhaar and bank details to one’s employer and has also got the UAN activated by providing a cancelled cheque with name, account number and IFS Code may use the ‘UAN based Form 10C’ to withdraw EPS funds.
However, leaving job before ten years will mean a lesser amount and will be based on the time period and a corresponding factor as per the Table D below:
Table D: How much EPS money one gets before 10 years
Years of service Proportion of wages
For example, if one with a basic salary of Rs 15,000 leaves a job after seven years, the amount of EPS money will be Rs 1,06,950 ( Rs 15,000 * 7.13), almost the same amount that was contributed towards EPS.
Scheme Certificate: If the service period is less than six months, one is not allowed to withdraw EPS but can only opt for ‘Scheme Certificate’, which captures the cumulative years in the job. Further, no matter how many years you have been in the job, if you need pension on retirement, opt for the ‘Scheme Certificate’ in the Form 10C every time when you submit this form to your new employer…..Read More>>