This scheme aims to provide higher pension benefits to those who are members of the EPS and contribute for a longer period
EPS higher Pension – Overview
The Employee Provident Fund Organization (EPFO) has introduced a new pension scheme for its members called the Higher Pension Scheme (EPS). This scheme aims to provide higher pension benefits to those who are members of the EPS and contribute for a longer period. In this blog post, we will discuss everything you need to know about the Higher Pension Scheme EPS.
Eligibility Criteria
To be eligible for the Higher Pension Scheme EPS, you must be a member of the EPS and have contributed for a minimum of 20 years. The scheme is open to both government and private sector employees. The contribution to the EPS is made by the employer, and the employee’s contribution to the EPF (Employee Provident Fund) also goes towards the EPS.
Benefits of the Higher Pension Scheme EPS
The Higher Pension Scheme EPS provides several benefits to its members. These benefits include
Increased Pension Amount
Under the new scheme, the pension amount is calculated based on the average monthly pay of the member in the last 60 months of service. Previously, the pension amount was calculated based on the average monthly pay of the member in the last 12 months of service. This means that the pension amount will be higher under the new scheme.
Commutation of Pension Members
Commutation of Pension Members of the Higher Pension Scheme EPS can also commute a part of their pension. This means that they can take a lump sum amount from their pension instead of receiving it on a monthly basis. The amount that can be commuted is determined based on the age of the member at the time of commutation.
Pension for Nominee
In the event of the member’s death, the nominee will receive a pension for their lifetime.
Contribution to the Higher Pension Scheme EPS
The contribution to the Higher Pension Scheme EPS is made by the employer. The contribution is calculated as a percentage of the employee’s basic pay and dearness allowance. The current contribution rate is 8.33% of the employee’s basic pay and dearness allowance, subject to a maximum of ₹15,000 per month. The contribution made by the employer towards the EPS is tax-free.
| Status of Employee | Exercise of joint option | Eligibility to claim 8.33% pension contribution on a higher salary | Mode of higher pension claim |
| Employees in service as on 01/09/2014 | Exercised joint option and rejected by the EPFO | Yes | filing a higher pension claim application |
| Employees in service as on 01/09/2014 | Not exercised joint option but contributing to EPS above the cap of ₹5,000/6,500 | Yes | exercising the joint option within 03/05/2023 |
| Employees retired before 01/09/2014 | Exercised joint option and rejected by the EPFO | Yes | filing a joint option and higher pension claim application |
| Employees retired before 01/09/2014 | Not exercised a joint option | No | NA |
Withdrawal of Pension
Members of the Higher Pension Scheme EPS can withdraw their pension once they attain the age of 58 years. However, if they wish to withdraw their pension before the age of 58, they can do so by commuting a part of their pension. The amount that can be commuted is determined based on the age of the member at the time of commutation.
Conclusion
The Higher Pension Scheme EPS is an excellent option for those who are looking to secure their future after retirement. The scheme provides higher pension benefits to its members and also allows them to commute a part of their pension. However, it is important to note that the scheme is only available to those who have been members of the EPS for a minimum of 20 years. If you meet the eligibility criteria, we would highly recommend that you consider enrolling in the Higher Pension Scheme EPS to secure your future after retirement.
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