How Much EPS Pension will you get With EPS Pension Calculator: EPS or the Employee Pension Scheme is a savings plan for which money is put forth by your employer into an account every month from your salary. This is the fund that provides different kinds of pension, which are retirement pension, widow pension, disablement pension and lastly, pension for nominees. This was started by Employee Provident Fund Organisation and its conception dates all the way back to 1952. The regulations which are followed by EPS and its sister saving programmes EPF (Employee Provident Fund) and EDLIS (Employee Deposit Linked Insurance Scheme) were decided in 1995. The same can be found on the website for EPFO if any other details are required.
What is the Employee Pension Scheme?
The Employee Pension Scheme or EPS is an amount that is taken from the monthly salary of all employees working in companies affiliated with the EPFO. About 8.33% of the employee’s salary goes into this pension fund. Before October 2014, the regulations stated that 8.33% of a salary up to that of Rs 6500 per month may be taken. This means that a value that would not exceed Rs 541 per month would go into the EPS. As of October 2014, this regulation was changed so that 8.33% of Rs 15000, i.e. Rs 1250 is the maximum value that can go into Employee Pension Scheme per month. One important thing to remember about the Employee Pension Scheme is that you do not avail any interest on this fund – you will receive the amount as it is when you attain retirement at the age of 58 years.
Conditional Pension with EPS
There are four different situations in which you may gain access to the funds in your Employee Pension Scheme.
- Superannuation: This is when an employee reaches the age of 58 years and is entitled to his or her provident fund, including the EPS, EPF and EDLIS. The employee is required to have worked a minimum of 10 years by this time. With superannuation pension, employees can continue working out of their own choice, but cannot have any further additions to the EPF, EPS and EDLIS.
- Early Pension: This is also called early superannuation and employees cannot continue to work once this has been availed. To be eligible for Early Pension, the employee must have worked for a minimum of 10 years and should be between the ages of 50 and 58 years.
- Permanent Total Disablement Pension: If an employee happens to have some kind of accident or becomes very sick, which deems him or her to become totally and permanently disabled at any time and cannot carry forth work, he or she is entitled to this kind of pension.
- Upon the death of the employee: There can be many different kinds of situations here. The death can be either while the employee is working, or after the employee has retired. Either way, the employee is required to have worked for a minimum of 1 month before the death. The following are the situations that can arise upon the timely or untimely death of the employee:
- If the employee is married without children: The pension goes to the spouse as a widow pension or widower pension.
- If the employee is married with 1 or 2 children: The pension goes equally to the spouse and the two children.
- If the employee is married with more than 2 children: The pension goes to the spouse and 2 children under the age of 25 years. The next child will get the pension when the 2 older children cross the age of 25 years.
- If the employee is unmarried: The pension will go to the nominated person(s). This is called nominee pension.
- If the employee does not have a nominee: The pension will go to the parents, with it going to the father first, then the mother (in case the father deceases).
How to Calculate How Much EPS Pension You Will Get?
It must be kept in mind that EPS can only be received as a pension if the employee has worked for a period of more than 10 years. If the employee has worked for less than 10 years, the EPS can be withdrawn normally, as mentioned before.
There are 2 situations to keep in mind here: If you started working before 15th November 1995, and if you started working after 15th November 1995.
For Employees Who Started Working Before 15th November 1995
There are 3 components to calculating EPS for people who started working before November 15th 1995, which are:
- Past Service: The number of years of service of the employee up until 15th November 1995.
- Pensionable Service: The number of years of service from 16th November 1995 onwards.
- Proportionate Reduction: This is when the past service is less than 24 years & and also when the past service and pensionable service added together is less than Rs 500.
The formula to calculate EPS pension is as follows:
Total EPS after 10 years of work or more = Past Service + Pensionable Service – Proportionate Reduction
For Employees Who Started Working After 16th November 1995
This will only include the Pensionable Service benefit which has been mentioned above. The formula to calculate this is as follows.
EPS pension = (average salary x months of service) / 70
For example, if the average salary is Rs 15000 per month, person X will be contributing Rs 1250 of this per month to her EPS. Person X has worked for 14 years starting in the year 2000 and retiring in 2014. Thus, the EPS pension which person X will be able to avail will be the following:
EPS pension of person X = (15000 x 14) / 70 = 3000
The EPS pension of person X upon retiring after 14 years of service will be Rs 3000 per month.
We need to keep in mind that if an employee has been in service for 20 years or more, the EPS pension will include a bonus of 2 extra years’ worth of the average salary.
For example, if employee Y has worked for 20 years at the average salary of Rs 14000, here’s how her pension will be calculated:
EPS pension of employee Y = [14000 x (20+2)] / 70 = 4400
Thus, the EPS pension of employee Y will be Rs 4400 per month.
The last thing to note here is that if the salary exceeds Rs 15000, for the purpose of the EPS, the salary will remain maximised at Rs 15000.
For example, the average salary of an employee is Rs 24000 and they have worked for 14 years. The maximum will be taken as Rs 15000 for this purpose (the remaining money will not be touched, it will go to the employee as the monthly salary). Looking at the above equation, the pension will be Rs 3000 a month, even if the salary is higher.
Some Things to Know about EPS
The maximum pension that can be collected from a salary in a month is Rs 3250, meaning that no matter how high your salary, this is the maximum that will be taken from it monthly in contribution towards your EPS. The minimum duration for which employees are eligible for pension is after working for 10 years, and the maximum duration for the calculation of EPS is 35 years. The entire contribution of 8.33% to the EPS is made by the employer to the employee’s EPS account. While you are only eligible for pension if you have worked for 10 years, if it so happens that you haven’t worked for that many years, you can withdraw the EPS amount as a regular savings deposit. According to the maximum amounts of EPS monthly contributions and also the maximum years of service, the highest pension that one may avail is Rs 7500 per month (which would amount to Rs 90000 per annum).
The EPS programme is a purposeful method of allowing people to save for their future. Pension funds are incredibly important because we never know what will happen. This kind of fund is important because it takes straight from your monthly salary and the employee need not do much or worry much about saving. It has a great plan for all employees in companies so that they do not need to worry about their futures at all.