Benefits of Employee Pension Scheme - and how it work? - CiteHR
Archnahr
Consultant, Writer And Trainer
Abbasiti
Assistant Engineer, Indian Telephone Industries,
KASS2011
Area Manager
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Hello

In some private organizations there is a provision of Employee pension scheme under which a specific amount get deducted from employee's every month salary and it get deposited in employee pension scheme as like PF.

My queries are;

1)Does any employee working in pvt.organization will receive a pension every month after his/her retirement ?

2)Does after the death of an employee (working in pvt.organization )his spouse will receive the pension every month ?

3)Is this pension scheme is same as that of Govt.pension scheme ?

4)If an employee keep on changing the organization every after 5 years, so how pension scheme get implemented ?

5)Lastly how much amount of Pension will an employee will receive after his/her retirement ?Is there any formula to calculate it ?

Thanks in advance.

Regards,

RB
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Dear RB,

1. Member will get monthly pension

2. Spouse & two children will get pension

4. Various services in EPF can be consolidated and pension can be availed accordingly.

5.I shall give some guidance for pension calculation as under :

There is no upper limit for Eps-95 pension. For pension calculation, the service will be taken into 2 parts. Service before 16.11.95 and service w.e.f 16.11.95. The first one is called as past service and latter one as pensionable service. Past service is divided into 4 slabs. Service upto 11 years, 12 to 15 years, 16 to 19 years and 20 & above. If the salary on 16.11.95 is below Rs. 2500, the monthly compensation will be Rs. 80, 95, 120 & 150 respectively. For Rs. 2500 & above this will be Rs. 85, 105, 135 & 170. This amount is for those who attain 58 years on 16.11.95. In the case of those attain 58 years after 16.11.95, the above compensation will be multiplied by a factor stipulated in table B, according to the difference between 16.11.95 and the date of completion of 58 years.

For pensionable service there is a formula to calculate pension. It is Pensionable Salary x Pensionable Service / 70. Pensionable salary can be categorised in to 3. 1) Below Rs. 6500. 2) Rs. 6500 & above, but contribution on statutory celing of Rs. 6500. 3) Above Rs. 6500 & opted to contribute on actual salary. In case of 2nd, pensionable salary is Rs. 6500. In other two cases, pensionable salary will be the average of last twelve months. Also if pensionable service is 20 years & above 2 year's bonus will be given.

For details please see the web site :

EPFO <link updated to site home>

One example I shall quote.

Date of Birth - 2.1.1961

Date of join - 23.2.1987

Salary on 16.11.95 - Rs. 2500 & above

Salary on completion of 58 years on 1.1.2019 - Rs. 6500 (Statutory Ceiling)

Past Service - 8 yr 9 m (approx) rounded to 9 years

Compensation - Rs. 85

Factor as per Table B (for less than 24 years, i.e the difference between 16.11.95 & 1.1.2019) - 6.102

(This can be calculated as 1.08 to the power of 24 - 0.5, correct to 3 decimals)

Past Service Benefit - 85 x 6.102 = Rs. 519 - (A)

Pensionable Service - 23 years

Bonus (Service is 20 & above) - 2

Pensionable Salary - Rs. 6500

Pensionable Benefit - 6500 x 25 / 70 = 2321 - (B)

Total Pension - (A) + (B) = Rs. 2840

Besides the above method calculation there will be a minimum for those who have service before 16.11.95. In the EPS-95, they are categorised into three.

1. Date of commencement of Pension before 16.11.2000

2. Date of commencement of Pension between 16.11.2000 & 16.11.2005

3. Date of commencement of Pension after 16.11.2005

As the first two categories are already over, I shall a give a brief on third.

Pensionable benefit (minimum) of Rs. 635 and Past service benefit as mentioned above, subject to a minimum of Rs. 800. This amount is for 24 yrs or more service. If it is less than 24 yrs, this will be reduced in proportionate (amount x actual service / 24). However this amount will be subject to a minimun of Rs. 450.

I shall insert Excel work sheet to calculate pension. Enter Date of Birth, Date of Join, Date of Seperation from Service, Salary on 16.11.95, Salary on Seperation from Service ( in compliance with the contribution to pension fund) and break in service before and after 16.11.95, if any in green colour column. The results will appear in yellow colour column. The red colour is for static information.

In case of any error or suggestion, please notice to me.

Abbas.P.S,

ITI Ltd, PALAKKAD - 678 623.

Ph. +91 9447 467 667

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Great work, Abbas
You have explained the entire things in a very professional and organised manner. In fact there are things even i was not aware of.
Thank you so much for this valuable contribution...it is such a pleasure to have people like you contributing in this forum.
Also, please take a look at this link, its an article in times of India which explains beautifully about the benefits of NPS (National Pension Scheme) and how it can be incorporated in our salaries in Private companies as well.
Article Window
It will surely reduce the Tax burden on all the employees who want to save or invest more than Rs. 1 lakh
Regards,
Archna
Dear Sir,
I have one question. I was trying to analyze if EPS is a good scheme or not, as we can withdraw EPS post 5 years of service in private companies. Post retirement, do we get pension paid till death. In case, if Mr X dies on the day of retirement, what happens next? Does pension gets paid to his nominee? If yes, for how long years.
In other extreme case, if Mr. X lives 100 years is pension paid till 100 years. Please advise.
Thanks,
Naveen G D
Dear Naveen,
Member pension is admissible till his/her death. Widow/widower pension will get pension till death, provide he/she did not remarry. Children pension is admissible till the age of 25 years, except in case of totally disabled/ mentally retarded children.
Abbas.P.S
Dear Experts,
Kindly Clarify my doubt about EPS, an employee get EPS benefit after rendering 10 years of continuous service and attaining age of 58
what happens actually? can the employee withdraw the PF after fullfulling the above criteria and get the whole amount of both contributions of employee and employer + get the pension as addtional for life time? or the pension which he will be getting is the pension which the employer contributed as 8.33% during his service? if it is then what's the benfit? just relaxation from tds?
I want calculation for EPS with new amended EPS ACT 2014. My date of birth is 01.01.1963. Date of joining service is 28.08.1984. Salary as on November 1995 was 6500/-. Present salary is 20000+. What will be my pension. Pl. share the amended EPS act if available.Thank you in anticipation.
Thanks all for guidance.
Can you please guide me for pension in my case.
My DOB is 13th Jan.'1975
I joined United India Insurance (Govt. Organisation) on 01.04.1995.
Resigned on 17.12.2007. Joined Cholamandalam GIC (Private) on 18.12.2007.
Resigned Chola on 13.07.2009 and joined Shriram Group (Private) on 23.08.2009 and continuing till today.
In this scenario, will I be eligible for pension at my retirement in 2033.
If yes, how much and if No then where my pension fund has gone which have been deducted by the previous employers ?
Dear friend, If you are a member of EPS, you are eligible for pension. But it will not be realistic to calculate quantum of pension amount now to be availed in 1933. Abbas.P.S
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