Benefits of Employee Pension Scheme - and how it work?

Hello,

In some private organizations, there is a provision of an Employee Pension Scheme under which a specific amount gets deducted from the employee's monthly salary, and it gets deposited in the employee pension scheme, similar to PF.

My queries are:

1) Will any employee working in a private organization receive a pension every month after their retirement?

2) Will the spouse of an employee working in a private organization receive a pension every month after the employee's death?

3) Is this pension scheme the same as the Government pension scheme?

4) If an employee keeps changing organizations every five years, how is the pension scheme implemented?

5) Lastly, how much pension will an employee receive after retirement? Is there a formula to calculate it?

Thanks in advance.

Regards,

RB

Dear RB,

Member will receive a monthly pension. Additionally, the spouse and two children will also receive pension benefits. Various services in EPF can be consolidated for easier access to pensions.

I will provide guidance on pension calculation as follows:

There is no upper limit for EPS-95 pension. The service is divided into two parts: service before 16.11.95 and service from 16.11.95 onwards. Past service is categorized into four slabs based on years of service. The monthly compensation varies depending on the salary on 16.11.95. For those aged 58 on 16.11.95, there are specific compensation amounts, which are adjusted for those who turn 58 after 16.11.95.

For pensionable service, the calculation formula is Pensionable Salary x Pensionable Service / 70. Pensionable salary is classified into three categories based on salary levels. Those with 20 years of pensionable service or more receive a two-year bonus.

For more details, please visit the EPFO website: [EPFO](http://epfindia.com).

An example calculation is provided below:

Date of Birth: 2.1.1961
Date of Joining: 23.2.1987
Salary on 16.11.95: Rs. 2500 and above
Salary on completion of 58 years on 1.1.2019: Rs. 6500 (Statutory Ceiling)
Past Service: Approximately 8 years 9 months, rounded to 9 years
Compensation: Rs. 85
Factor from Table B: 6.102
Past Service Benefit: Rs. 519
Pensionable Service: 23 years
Bonus: 2 years
Pensionable Salary: Rs. 6500
Pensionable Benefit: Rs. 2321
Total Pension: Rs. 2840

Apart from the above calculation method, there are minimum benefits for those with service before 16.11.95, categorized into three groups based on pension commencement dates.

I will include an Excel worksheet for pension calculations, where you can input relevant details. Errors or suggestions can be addressed to me.

Abbas.P.S,
ITI Ltd, PALAKKAD - 678 623.
Ph. +91 9447 467 667

If you have any questions or need further clarification, feel free to reach out.

Great work, Abbas. You have explained everything in a very professional and organized 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. It's an article in the Times of India which beautifully explains the benefits of NPS (National Pension Scheme) and how it can be incorporated into our salaries in private companies as well. [Article Window](http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Archive&Source=Page&am p;amp;Skin=TOINEW&BaseHref=CAP/2011/03/14&PageLabel=20&EntityId=Ar01902&a mp;amp;ViewMode=HTML&GZ=T) It will surely reduce the tax burden on all 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 after 5 years of service in private companies. Post-retirement, do we get a pension paid until death? In the case where Mr. X dies on the day of retirement, what happens next? Does the pension get paid to his nominee? If yes, for how many years?

In another extreme case, if Mr. X lives to be 100 years old, is the pension paid until he reaches 100 years? Please advise.

Thanks,
Naveen G D

Dear Naveen,

Member pension is admissible until his/her death. Widow/widower pension will be received until death, provided he/she does not remarry. Children's pension is admissible until the age of 25 years, except in the case of totally disabled or mentally retarded children.

Abbas. P.S.

Dear Experts,

Kindly clarify my doubt about EPS. An employee gets EPS benefits after rendering 10 years of continuous service and attaining the age of 58. What happens actually? Can the employee withdraw the PF after fulfilling the above criteria and get the whole amount of both contributions of the employee and employer, in addition to getting the pension for a lifetime? Or is the pension the employee will receive only the contribution made by the employer as 8.33% during his service? If it is, then what's the benefit? Just relaxation from TDS?

I want a calculation for EPS with the new amended EPS Act of 2014. My date of birth is 01.01.1963, and the date of joining service is 28.08.1984. My salary as of November 1995 was 6500/-. Currently, my salary is 20000+. I would like to know what my pension will be. Please share the amended EPS Act if available. Thank you in anticipation.

Thank you all for the guidance.

Can you please guide me regarding my pension entitlement in my case? My date of birth is 13th Jan. 1975. I started working at United India Insurance (a Government organization) on 01.04.1995. I resigned from this position on 17.12.2007 and joined Cholamandalam GIC (a private company) on 18.12.2007. I resigned from Chola on 13.07.2009 and subsequently joined Shriram Group (a private company) on 23.08.2009, where I am currently employed.

Given this work history, would I be eligible for a pension upon my retirement in 2033? If so, could you provide an estimate of the pension amount? If not, I am curious about the whereabouts of the pension fund contributions deducted by my previous employers.

Dear friend,

If you are a member of EPS, you are eligible for a pension. However, it will not be realistic to calculate the quantum of the pension amount now to be availed in 1933.

Abbas.P.S