Understanding the Employees' Pension Scheme 1995: What Do You Need to Know?

I am a worker teacher under Regional Workers' Education Centre, KOZHIKODE. I wish to share the information on PF pension / EPS-95 with the friends on citeHR.com. Your responses are invited accordingly.

ABBAS.P.S,
Secretary,
ITI Employees' Association,
ITI Ltd, PALAKKAD - 678 623,
KERALA, INDIA.
Ph: +91 9447 467 667

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 past service, and the latter one is pensionable service. Past service is divided into 4 slabs: service up to 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 who 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 categorized into 3 groups: 1) Below Rs. 6500. 2) Rs. 6500 & above but contribution on the statutory ceiling of Rs. 6500. 3) Above Rs. 6500 & opted to contribute on actual salary. In the case of the 2nd group, pensionable salary is Rs. 6500. In the other two cases, pensionable salary will be the average of the last twelve months. Also, if pensionable service is 20 years & above, a 2-year bonus will be given.

For details, please see the website: EPFO.

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 of calculation, there will be a minimum for those who have service before 16.11.95. In the EPS-95, they are categorized into three groups:

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 give a brief on the 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 proportionately (amount x actual service / 24). However, this amount will be subject to a minimum of Rs. 450.

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

In case of any error or suggestion, please notify me.

Dear Shish Uniyal,

Thank you for your compliment. If you have any doubts about EPS-95, please raise them in this column. For example, an EPF subscriber retired from service after the age of 50 years and subsequently availed reduced pension. Later, he came to join another job.

What about his pension contribution in the present job? Because in the normal case, it is statutory and 8.33% of the employer's contribution has to go to the pension fund. At the same time, he is getting a pension for his previous job.

Ans: There will not be any contribution to the pension fund, and the entire amount will go to his individual PF account.

Nobody has raised any questions. Now, I shall register one question for the kind attention of my friends in citeHR.

An employee with a salary of Rs. 20,000/month has contributed to EPS-95 on the full amount, i.e., beyond the ceiling limit. Due to some unforeseen circumstances, he retired at the age of 45 years. Within a few months, he joined a new firm with EPF coverage for a meager salary of Rs. 5,000/month only.

Is it statutory to contribute to EPS-95 in the second job again? If it is statutory, he will be compelled to receive a small amount based on his present salary, even though he contributed higher amounts. Is it justifiable?

With regards,
ABBAS.P.S

I have asked the above question to Dr. Vedprakash. He answered that as per the norms of the EPS-95/EPF, he has to continue in EPS and is eligible for a pension based only on the average of the last twelve months' salary. Hence, it is my humble request to all concerned to take up the issue with the EPF authorities.

Abbas. P. S

In CiteHR/274965, Binod Kumar Dutta has asked as under:

Hi Friends, seniors & Experts,

I have some confusion regarding the pension scheme of PF and need your suggestion, comments & guidance. My query is as follows:

We are employees of a Pvt. Ltd. company. One of the employee's DOB is 15.07.1946 and DOJ is 24.04.2000, and till date, he is in the job and his PF contribution is continuous. Now he wants retirement. My question is whether he is entitled to a pension or not? If yes, then how much pension will he get, his current salary is Rs. 4500/ month.

With respect & regard,

Thanks,

Binod Kumar Dutta

I have replied as under:

Dear Binod Kumar Dutta,

As per the norms of the Employees' Pension Scheme -1995 (PF Pension), the contribution to the Pension Fund will cease on the completion of 58 years. In this case, completion of 58 years is on 14.7.2004. This means his pensionable service is only 4 years (between 24.4.2000 and 14.7.2004). The minimum service to get EPF pension is stipulated as 10 years.

Accordingly, he is not eligible to receive the above pension. But he is entitled to the withdrawal benefit immediately after the completion of 58 years. For four years, it is 3.99 (factor as per Table D) x salary at the time of 58 years. The present salary of Rs. 4500/- has no role in these calculations.

After 58 years, the full PF contribution has to go to his individual account.

Abbas.P.S

Binod Kumar Dutta has asked again as under:

Dear Abbas P.S. & Madhu T.K.,

Thanks for your quick response. This response improved our knowledge and will help in solving the case. The detailed scenario of the situation is as follows. I am mentioning it once again because there is a change in the information provided previously.

Employee's Date Of Birth - 08.09.1946

Employee's Date Of Joining - 15.04.2000

Salary was - Rs. 1,874.42 P. Per month (April 2004)

Due to a lack of awareness, the contribution to the Pension Fund is ceaseless till date. We will stop it from next month (Contribution for the month of August - 2010).

Now, my question is what are the formalities to withdraw the benefit? What will happen to the contribution deposited from 04/2004 onwards? Will this amount be calculated the same as Mr. Abbas informed for the period of Date of Joining to attaining 58 years of age, which attracts Table 'D'? I am eager to know what will happen to the contribution deposited in the pension fund after attaining the age of 58 years.

I hope, now I have clearly explained the case, and you are in a position to suggest better.

Waiting for your early response.

Thanks,

With Respect & Regards,

Binod Kumar Dutta.

I have replied as under:

Dear Binod Kumar Dutta,

Withdrawal benefit is applicable only up to 58 years. In this case, it is 3.99 x 1874.42 = 7479/- (Round figure).

Contribution to the Pension Fund after 58 years has to be converted to his individual PF account as the Employer's contribution.

In this regard, please contact/write to your Regional EPF Commissioner with full details.

With regards,

Abbas.P.S

In citehr/73554 D.B. Satya has raised questions as under:

My Statutory PF is deducting Rs. 1026 (12% on my basic). My employer is depositing the same amount. Deduction has been started from my April 2007 salary. My tentative retirement date is 03.01.2029.

Could anyone please tell me what amount (approx.) I will get from Provident Fund & Pension Scheme based on my present deduction? If I want to take pension until my death, what would be the amount? Will my wife get a pension after my death? If yes, then how much?

Awaiting a favorable reply.

I have answered as follows:

From your details, it is learned that your salary is Rs. 8550 because its 12% (1026) is deducted to EPF. If you have not opted for a pension beyond Rs. 6500, it will be limited to 6500.

Your service - 22 years

Pensionable Service with bonus - 22+2=24

Pension = 24 x 6500/70 = 2229

Note that the calculation is based on the ceiling limit of Rs. 6500. If it is increased, the pensionable amount will also be enhanced proportionately.

After the member's death, the spouse will receive 50% of the pensionable amount until her death or remarriage. In addition, two children will receive 25% each of the widow/widower pension until they reach 25 years of age. When the widow/widower pension stops, the child pension will become an orphan pension, resulting in three times the original child pension.

In citehr/84753 Kiran Kumar has asked some questions as under:

I am working in a private company for 8 years. I heard that if I continue in the same firm or continue the employment for more than 10 years, then my PF amount (Part of the PF) cannot be withdrawn, as it is with the pension fund. So, I want to know if I keep continuing for more than 10 years, what benefits I get with the PF pension scheme. Is it better than other investments?

Please suggest whether I should go for the pension scheme or not. If I opt for it, what benefits will I get compared to other outside pension schemes?

Thank You

M. Kiran Kumar

I have answered as under:

You have joined EPS after 16.11.95. The method of calculation of the pensionable amount in this case is,

Pensionable Service x Pensionable Salary / 70.

Here, pensionable service means the difference between (1) date of joining in EPS and (2) date of exit or completion of 58 years of age, whichever is earlier. If you continue in EPS until 58 years and have 20 years or more of service, 2 years of bonus will be added to the pensionable service.

The above pension amount is to draw the pension at 58 years. You may also draw the pension before 58 years, which is called reduced pension, under the following conditions:

1. The minimum age should be 50 years.

2. You should not be in service (EPS applicable) at the time of pension requirement.

3. You will lose 4% each in pension for every year below 58 years.

Abbas.P.S

Dear Parmod Redhu,

For pension calculation, the following details are required:

1. Date of Birth
2. Date of joining in EPF
3. Break in service before 16.11.95
4. Break in service after 16.11.95
5. Salary on 16.11.95
6. Salary at the time of Exit

Based on the available information, I have reached the following conclusions:

1. Your service before 16.11.95 is 17 years.
2. Service after 16.11.95 is 1 year.

Since you were below 48 years old on 16.11.95, you are entitled to receive the minimum pension as follows:

- If your salary on 16.11.95 is below 2500/-:
- Past Service Benefit: 120x4.844 = 581
- Pensionable Service Benefit: 635
- Total: 1216/- (Subject to a minimum of 800/-) for 24 years of service.
- For 18 years: 1216x18/24 = 912 (Subject to a minimum of 450/-)

- If your salary on 16.11.95 is 2500/- or above:
- Past Service Benefit: 135x4.844 = 654
- Pensionable Service Benefit: 635
- Total: 1289 for 24 years
- For 18 years: 967

You will either receive 912 (if below 2500/- on 16.11.95) or 967 (if 2500/- or above on 16.11.95) upon reaching 58 years of age.

Individuals not in service with PF applicability can start receiving pension from the age of 50 onwards. However, for each year before the age of 58, there will be a 4% deduction. For instance, if you choose to receive a pension at 51 years, the pension multiplier will be 0.96 to the power of 7, resulting in 0.885.

Therefore, the reduced pension at 51 years will be either 807 or 856, depending on the initial calculations.

Regards,
Abbas P. S.

In citeHR/228719, Gunnam Bhagawan has asked as follows:

Dear Seniors,

Please kindly calculate the pension using the following information:

Family Pension Scheme Date of Joining: 01-08-1994

Employees Pension Scheme Date of Joining: 16-11-1995

Last 12 Months Average Salary: 6,500/-

November 1995 Salary: 2,323/-

Date of Birth: 22-10-1951

58 years completed date: 21-10-2009

I have replied as follows:

Now regarding your details:

Past Service (before 16.11.95) - 1 year

Benefit - Rs. 80/-

Multiplying factor as per table B - 2.826

Past Service Benefit - 80 x 2.826 = 226/- (1)

Pensionable Service - 14 years

Pensionable salary - Rs. 6500/-

Pensionable Benefit - 14 x 6500 / 70 = 1300/- (2)

Total Pension - (1) + (2) = 226 + 1300 = Rs. 1526/-

Abbas.P.S

In citehr/171816 amlans has asked as under:

I joined a company in 1975 and took early retirement in 1999 at the age of 48 years 7 months. I was a member of the 1995 pension scheme and attained 58 years of age on 10.04.09. My questions:

i) From which month of 2009 should I get full pension?

ii) What should be the pension amount of my past service before 15.11.1995?

Regards.

I have replied as under:

Dear amlans,

I assume that your Date of Birth is 10.4.1951. Then you will get full pension from 10.4.2009 onwards.

Your Past Service benefit will be:

1. Rs. 480 provided salary on 16.11.95 is Rs. 2500 or more

2. Rs. 424 if it is below Rs. 2500.

In addition, you will get a minimum pension of Rs. 635 for your pensionable service, i.e., service after 16.11.95.

Hence, your total pension is Rs. 1115 or Rs. 1059 as the case may be, provided you have a service of 23 years & 6 months. If it is less than that, the above amount will be multiplied by the factor 23/24. Accordingly, it will be Rs. 1069 or Rs. 1015 respectively. But since you have mentioned that your birth is in April 1951 & retirement at the age of 48 years & 7 months, the retirement date may be 30.11.1999. Then you will get the first option, i.e., either 1115 or 1059.

Abbas.P.S, ITI LTD, PALAKKAD - 678 623.

Ph. +91 9447 467 667

Re: Employees' Pension Scheme - 1995

My pensionable service from November 16, 1995, to July 1, 2009, i.e., my total pensionable service is 13 years, 6 months, and 16 days. So, how many years of my service will be taken into consideration while calculating the pension amount? Please reply soon.

Dear Popat More,

From 16.11.95 to 1.7.2009, the pensionable service is 13 years, 7 months, and 16 days. The calculation is as follows:
- 16.11.95 to 15.11.08 - 13 years
- 16.11.08 to 15.6.09 - 7 months
- 16.6.09 to 1.7.09 - 16 days

As it is more than 13 years and 6 months, it will be rounded up to 14 years. Accordingly, you will get an amount equivalent to 20% of the last twelve months' salary.

Abbas

In CiteHR/49958, Mr. G.R. Bavarva has asked as follows:

Dear Abbas,

I am giving my details below. What amount should I get as pension?

1. Date of Birth: 06-08-1951
2. Date of Join in EPF: 01-12-1974
3. Break in service before 16.11.95: NIL
4. Break in service after 16.11.95: NIL
5. Salary on 16.11.95 > 5000
6. Salary at the time of Exit > 50000.

By entering the above details in the Excel sheet you have provided, I should get Rs. 1780/- as pension. However, I have received the P.P.O., and the amount of pension is Rs. 1687/- . Kindly advise me.

G.R. Bavarva

I have replied as follows:

Dear Bavarva,

I require two more details:

1) Date of Exit from Service
2) Date of Pension availed

Note: If you have continued in service till the completion of 58 years & availed pension thereafter, you may contact the Office of the Regional PF Commissioner and inform me of their response.

Abbas

He asked again as follows:

Dear Abbas,

Below are the details I forgot to submit, sorry.

1) Date of Exit from Service: I am still in service up to 31-08-2011.
2) Date of Pension availed: My pension started from 06-08-2009, and it was paid with arrears in March/April 2010 into my bank account.

I had submitted an application at the Pension Office in Surat, but up to now, I have not received any response from them.

Regards,

G.R. Bavarva

I have replied as follows:

Dear Bavarva,

From the details provided by you, you are entitled to receive Rs. 1780/-. However, there seems to be a difference of Rs. 93. This is equivalent to one year's pension, i.e., 6500x1/70. This indicates there may be a break in service of around 3 months or more after 16.11.95.

The calculation of pensionable service is as follows:

16.11.95 to 15.5.2009 = 13 years & 6 months, which needs to be rounded up to 14 years. There may have been a discrepancy in the counting of the period prior to 15.5.2009. The reason for the shortage of this service may be a break in service or an error in rounding up for the last 8 months. However, the correct reason has to be obtained from EPF. If your employer is prompt, you can also get the details from them.

Abbas.P.S

He asked again as follows:

Dear Abbas,

I have received a response from the A.P.F. Commissioner in Surat regarding my application for receiving less pension as stated in our earlier discussion.

In their reply, they have referenced H.O. Letter No. PENSION/A&C/I/2000/PIC/VOL.VI/90737 dated 19/02/2009 for the fixation of pension.

Kindly obtain details of the referred letter if possible. If there is any clause for clarification of my reduced pension, then okay. Otherwise, where do I have to approach for rectification? Please advise.

G.R. Bavarva

I have replied as follows:

Dear Bavarva,

You had mentioned that your pension started on 6.8.2009. In my previous response, it was detailed that if the pension date is before 15.5.2009, the pensionable service will be 13 years, and for on or after 15.5.2009, it will be 14 years.

However, the PF authorities have stated that the pension processing letter date is 19.2.2009. Therefore, one year less in service is justifiable.

For those continuing in service, the service for pension will be considered up to the completion of 58 years (age). Please verify if this applies in your case. If yes, there is no basis to file any complaint in this regard.

Abbas.P.S

In citeHR/293158, Mr. Hariharan has posted as:

Dear Sirs/Madam,

I had worked in a factory for about 23 years. Since the company was almost sinking due to financial loss, I had to resign from the job. Upon my resignation, I immediately closed my PF account and applied for the settlement of PF, and I received the amount. In the meantime, I understand that ex-employees of the company can claim a monthly pension through PF upon attaining 50 years of age, if the company no longer exists. Please guide me on how to claim my monthly pension amount. I am currently 55 years old. During this time, I have applied for another job where the management is deducting the PF amount through a fresh PF account. Can I receive a pension amount from both PF accounts?

Regards,
S. Hariharan

I replied as follows:

Dear Hariharan,

You will not receive two pensions from EPS. Please apply for the transfer of your previous service in Form 19 through your previous employer. After service in EPF or upon reaching 58 years of age, whichever comes earlier, you will be eligible for a pension. If you start drawing a pension before turning 58 years old, you will incur a 4% reduction in pension for each year below 58 years.

Abbas P.S.

Mr. Hariharan asked again:

Dear Mr. Abbas,

Thank you for your email. Please note that I have already closed my earlier PF account and withdrawn the money from the PF through the previous company, which is now completely closed. I have been informed by my former colleagues that I am eligible to receive a monthly pension upon reaching 50 years of age since the company is now closed.

Most of my former colleagues who have reached 50 years old are currently receiving a monthly pension from the PF. After a long gap, I secured another job, and when the management inquired about PF transfer, I informed them that my earlier PF account was closed. Therefore, my current employer has provided me with another PF account. Now, at 55 years of age, I would like to know how to receive a monthly pension from the previous PF account.

Since my previous employer's company is completely closed, how can I obtain Form 19?

After reaching 58 years of age and upon superannuation, am I eligible for a monthly pension from both the present employer as well as the previous PF account?

I apologize for taking up your time.

Regards,
S. Hariharan

I replied again:

Dear Hariharan,

Pension eligibility based on age can be categorized into two groups: 1) Attainment of 58 years of age. 2) Age between 50 years and below 58 years.

Regarding the first category, one can apply for a pension unconditionally. However, for the second category, there are certain conditions to consider. a) The individual should not be in EPF applicable service. b) For every year below 58 years, a 4% reduction will be applied to the pension amount.

As you mentioned that you have not yet reached 58 years and are still in service with EPF, how can you apply for a pension? The only solution is to omit the present PF account details. In this case, the 8.33% of the present employer's contribution to EPS will be lost. It is not possible to receive two pensions from EPS. If someone avails a pension at or after 50 years of age and later joins EPF, there will be no contribution to EPS, and the full amount will go to the individual PF account as the employer's contribution. If, by mistake, EPS contributions are made, they will be reverted to PF. However, you cannot apply for a second pension or request the EPS contribution to be reverted to PF since you have not received a pension before joining the new PF. The only legal and cost-effective solution is to transfer the previous EPS service to the current service. After leaving the current EPS (either due to the cessation of service or upon reaching 58 years of age), you can apply for a pension based on the total service.

Abbas P.S.

In citehr/309922 Gayathri Thimappa has raised queries as under:

Hello Experts,

I am 56 years old from Bangalore and I have 2 sons.

My husband worked in Karnataka Road Transport Service (KSRTC) as a junior assistant for almost 30 years.

He passed away on January 31, 1997. At that time, my first son was 18 years old, and my second son was 16 years old.

I received my first pension of Rs. 2626/- on December 31, 1997.

From September 1998, the pension was split as 1750+438+438 and was debited into my account. This continued until August 2001. Meanwhile, I received arrears in December 2000 of Rs. 3072/-.

From August 2001, the pension amount increased to Rs. 1986+480+480/- and continued until January 2002.

We opened two accounts for my sons in February 2002, and Rs. 480+480 was deposited into their respective accounts, and I was debited Rs. 1986/- from then on.

In 2004, my first son turned 25 years old and stopped receiving the pension of Rs. 480/-. In 2007, my second son turned 25 years old and also stopped receiving the pension of Rs. 480/-.

Now, my pension is just Rs. 1986/-. Is this the correct procedure, or should I be receiving Rs. 1986+960/- now that my sons have stopped getting it?

In the pension letter received, the address is Bhavishyanidhi Bhavan, Rajaram Mohan Roy Road, Bangalore.

The subject is:

Disbursement of pension sanctioned to you under Employees Pension Scheme 1995.

It states that an amount of Rs. 3524 has been sanctioned to me towards monthly pension under the EPF scheme 1995 from February 1, 1997, to October 31, 1997.

I did receive Rs. 31742/- from the bank, but was my pension supposed to be Rs. 3524/- every month from then on?

Please help me. I did not get a good response from the EPF office about these doubts.

Thanks & Regards,

Gayathri Thimappa

My Response:

The maximum widow pension as per Table C payable on February 1, 1997, is Rs. 1750. Child pension is 25% of the widow's pension, i.e., 1750x25% = 437.50, rounded to 438 each.

According to Section 32 of EPS-95, there should be an annual valuation of the pension fund. Accordingly, hikes of 4%, 5.5%, 4%, 4% were granted for the period 16.11.95 to 15.11.96, 16.11.96 to 31.3.98, 1.4.98 to 31.3.99, 1.4.99 to 31.3.2000, respectively, on pensions for the pensioners at that time. As your pension is applicable from February 1, 1997, onwards, the first hike of 4% is not payable to you. However, you should get the balance 5.5+4+4 = 13.5%. This is why your pension was enhanced from 1750 to 1986. But at the same time, child pension should also be hiked to 13.5%, resulting in an amount of Rs. 497. You mentioned that it was enhanced to Rs. 480 only. Please bring this to the notice of the concerned RPFC. (497 is from 1.4.2000 onwards. From 1.4.99, it should be 480 and from 1.4.98, it should be 462).

You are eligible for a pension of Rs. 1986 only. The child pension has to be stopped on attaining an age of 25 years. Hence, the procedure of EPFO is correct in this regard.

Abbas.P.S

Gayathri's Response:

Mr. Abbas,

Thank you very much for your explanation.

Yes, you are right. My sons received Rs. 497/- from 2000. I verified it from the passbook entries; it was a typo.

Thanks again,

Gayathri T

Additional Posting:

Dear Abbas,

Excellent work and very informative. You have a great understanding of the EPFO act provisions.

Regards,

M.V. Kannan