Understanding EPS Deductions: Who Qualifies and When Do They End?

Hello Team, Can anyone please explain to me how EPS deduction works? Who is eligible for the deduction, and when do we have to stop? Could you please provide a detailed explanation of how it works? Thank you, Vijith T K

First of all, please understand that there is no EPS DEDUCTION but only CONTRIBUTION. EPS (Employees' Pension Scheme) is a contribution by the employer in respect of employees who are covered by EPF and EPS. An employee joining any establishment for the first time with a salary of more than Rs 15,000 may be completely excluded from the coverage of EPF. But if the company is ready to extend it to all employees irrespective of salary, then you can cover all employees. However, in respect of those employees, you are not expected to contribute to the pension scheme, but the entire amount payable by the employer should be remitted or contributed into PF only.

At the same time, if the new employee (employee joining your establishment) is an existing member of EPF with pension benefits, then on a ceiling of Rs 15,000, you should also continue to contribute to the Pension fund. You can stop the Pension Fund contribution on the date on which the employee reaches the age of 58 years.

Hi Vijith T K, Thank you for your prompt response. We recently received a rejection for the transfer claim of one of our former employees' PF account. The reason for the rejection is detailed in the attached screenshot. Her date of joining (DOJ) with PF was 11th September 2017 at a different company. At the time she became eligible for EPS, her salary was below 15,000. In her previous company, EPS contributions were made when her salary was 75,000. Currently, her salary exceeds 1,00,000, and we have contributed 1,250 to her EPS account. Could you please advise on the steps to rectify this issue?

Thank you, Vijith T K

You can submit an explanation that at the time of joining her first company (with the EPF No of the establishment and member ID), her salary was less than Rs. 15,000, and therefore she was covered by EPS. When she joined the second and subsequent companies, since she qualified to be an existing member of EPS, the contributions were paid to EPS as well. We also followed the same procedure, and we believe that there is no non-compliance in this case.