Confused About EPS Withdrawal and Pension Eligibility? Let's Clarify the Rules Together

Hello, I have a query regarding EPF withdrawal with respect to EPS. I request you to please correct me if I am wrong and resolve the stated query.

EPS Contribution Withdrawal

1) The employee can withdraw his/her EPS contribution after the completion of 6 months of service.

1a) If so, how much of the amount can he withdraw considering that EPS is deducted keeping a salary of Rs 6,500 per month with a contribution capped at Rs 541? Therefore, for a period of a minimum of 6 months contribution, the total accumulated amount is approximately Rs 3250.

Pension Eligibility

2) The employee can opt for a pension after the completion of 9.5 years of service.

3) If this is so, is a gap of even 1 month in contribution acceptable, or will he be ineligible for a pension?

EPS in Case of Early Departure

4) In the event the employee contributes to the EPF scheme but leaves before the completion of 6 months of employment, what happens to his EPS? Is it forfeited, or can he claim it when he/she joins a new organization and opts for EPF?

Minimum Service Period for EPF Withdrawal

5) Is there any minimum period of service for the withdrawal of EPF?

Please clarify as I am quite confused about it.

Regards, Anuradha

Dear Anuradha,

For those who contributed to EPS for 6 months, they are eligible for withdrawal after cessation of service. The amount to be withdrawn is calculated as follows: 1.02 x 6500 = 6630.

For those who contributed to EPS for 9.5 years, they are eligible for a pension.

Non-contributory periods are not a reason for pension denial.

Service of less than 6 months in EPS is also transferable to future service.

For PF withdrawal, there is no minimum period.

Abbas P.S.

Hi,

To become eligible for a pension, an employee has to complete 10 years of service as an EPS member. Otherwise, they are only eligible for a pension withdrawal benefit. An employee is allowed to draw a monthly reduced pension from a date earlier than 58 years of age but not earlier than 50 years of age. In such cases, the amount of pension shall be reduced at a rate of 3% for every year the age falls short of 58 years.

Thank you.

Dear friends,

1) Even though the minimum service for EPS is 10 years, 9.5 years will be rounded up to 10 years.
2) In reduced pension, the rate of reduction is 4% per annum, not 3%.

Abbas.P.S

Respected Abbas ji,

Thank you for the detailed response. However, please clarify pt1a).

I am unable to understand what is 1.02. In simple words, is it a factor or a calculated value and if so, how is it calculated. Also, what will be the EPS withdrawal formula for any person wanting to withdraw the EPS amount between 6 months to 9.5 years of service.

Also, what is the concept of pt 2 in your second post. I would also request you to suggest what happens to the EPS amount accumulated by such an employee who leaves an organization for less than 6 months of service.

Please help.

Thanking you,
Anuradha

Though Mr. Abbas has clarified most points (as he usually does in all posts related to PF and Pension), I would like to add further clarity to your query. Please note my points:

1) The employee can withdraw his/her EPS contribution only after completing 6 months. Prior to that, the EPS contribution is forfeited by the EPFO.

1a) After completing 6 months, the amount deposited towards EPS can be withdrawn fully. However, the EPFO does not pay any interest on that contribution. Interest is only paid on EPF contributions. The calculation of the factor 1.02 is not clear to me either. Why this is done on 6500/- also needs clarification. Let's wait for Mr. Abbas's valued suggestions.

2) A service period of 9.5 years is eligible for a pension and will be counted as 10 years when calculating the pension.

3) Same as suggested by Mr. Abbas.

4) If an employee worked for less than 6 months and opts for withdrawal of PF-EPS, then the EPS amount will be forfeited by the EPFO (as I already clarified in my first point). However, if the employee transfers his/her EPF-EPS to a new organization and the total service crosses 6 months, then the employee can withdraw the full EPS as well (subject to service being less than 9.5 years).

5) There is no minimum service period limit for EPF withdrawal, subject to 6 months of service. (Less than 6 months of service will lead to forfeiture of EPS by the EPFO).

Hope I have clarified your points/queries.

Hi,

Can anyone clarify how many years it takes to receive a pension and what percentage of interest is applied to the pension amount?

Regards,
Sridharrajan