What Is Employees Pension Scheme?

A pension is a retirement plan for employees that is funded by the company, the employee, or both, with the employer typically covering the majority of payments. When the employee retires, she receives an annuity based on the pension terms. Pension funds are significantly less widespread than they formerly were, with the great majority of pension holders being labour unions and government personnel.

The Employees' Provident Fund Organisation's Employee Pension Scheme (EPS) is a social security scheme (EPFO). The scheme's principal goal is to provide pension benefits to employees in the organised sector. However, in order to be eligible for pension payments, a person must have worked for at least 10 years. This article goes over the Employee Pension Scheme in depth, including its characteristics, eligibility, and kinds. To understand more about employee pension scheme, read on.

What Is An Employee Pension Scheme?

The Employee Pension Scheme was established in 1995, and all current and new members are eligible to participate. The initiative has the support of the Indian government. As a result, the programme ensures a profit (pension amount). As a result, EPS can be a reliable source of income in retirement.

Employees Provident Fund and Miscellaneous Provision Act of 1952 participants are automatically added to the EPS scheme's eligibility list. Furthermore, when an employee dies, the pension amount is payable to their nominee. To be eligible for Pension Benefits, an individual must have completed 10 years of service.

Eligibility For An Employee Pension Scheme

Following is the eligibility criteria for an employee pension scheme -

1. An individual must be a member of the EPFO to participate.
2. Has served for a total of ten years. Furthermore, if you have fewer than 10 years of service but more than 6 months, you can withdraw a portion of your EPS.
3. Should be 58 years old.
4. From the age of 50, you can also withdraw EPS at a reduced rate.
5. You can also postpone your pension for two years (up to 60 years). After the two-year deferral period, you will get a pension at a rate of 4% each year.

Features Of Employee Pension Scheme

Following are the features of employee pension scheme -

1. The EPS plan has the support of the Indian government. As a result, the scheme's returns are assured, and there are no risks associated.
2. The plan provides financial support and is a reliable source of income throughout retirement.
3. Individuals who participate in the EPF programme are automatically enrolled in the EPS programme.
4. Individuals whose Basic Salary + DA is INR 15,000 or less are required to enrol in the plan.
5. Once you reach the age of 50, you can withdraw funds from an EPS account. These withdrawals, however, will have a lower interest rate.
6. Individuals who are partially or completely physically handicapped get a pension regardless of whether they satisfy the service term criterion. Furthermore, this pension begins on the day of disability and lasts for the rest of one's life.
7. The children will be able to receive the pension if the widow or widower remarries. Furthermore, children will be classified as orphans in such situations.
8. INR 1,000 is the minimum pension amount.
9. If the widow or widower is getting an EPS payment, they will continue to receive it until they pass away. Children are entitled to the pension amount if their parents die before they reach the age of 25. In addition, if the kid is physically handicapped, they are entitled to the pension amount until they die.

Endnotes

The People Pension Scheme (EPS) was established in 1995 with the primary goal of assisting employees working in the organised sector. EPS will be available to all employees who are eligible for the Employees Provident Fund (EPF) plan.

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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.