Widow, orphan, and more: Know about various EPFO pension scheme types

The Employees’ Provident Fund Organisation (EPFO) in India is crucial for providing financial security to employees. Both employers and employees contribute to this mandatory scheme every month.

What is EPFO?

The EPFO is a statutory body under the Ministry of Labour and Employment, Government of India. It manages the EPF, a social security scheme designed for Indian workers. Its main job is to oversee and regulate the EPF, Employees’ Pension Scheme (EPS), and the Insurance Scheme (EDLI) for employees.

Eligibility criteria for EPS

To be eligible for EPS benefits, you must:

— Be an EPFO member

— Be at least 50 years old for early pension or 58 years old for regular pension

— Complete at least 10 years of service

Types of pensions under EPS

Provident fund subscribers, their families, and nominees are eligible for various types of pensions under the EPFO.

Widow Pension: A widow receives a pension until her death or remarriage. If there are multiple widows, the eldest gets the pension.

Child Pension: Children get a child pension in addition to the widow pension until they turn 25. This is 25% of the widow pension, with a maximum of two children receiving the benefit.

Reduced Pension: Members with at least 10 years of service, aged between 50 and 58, can opt for early pension. The amount is reduced by 4% for each year below 58.

Orphan Pension: If a member dies without a surviving widow, their children receive an orphan pension, which is 75% of the widow pension. Up to two children can benefit.

Contributions to EPF and EPS

Every month, both the employer and the employee contribute 12% of the employee’s salary to the EPF. From the employer's share, 8.33% is directed towards the EPS, while the remaining 3.67% goes to the EPF.

Eligibility for pension

To receive pension benefits, a member must retire at 58 years old with at least 10 years of service. If a member doesn’t complete 10 years of service before turning 58, they can withdraw the entire amount at 58 using Form 10C, but won't get a monthly pension. In case of permanent disability, members are eligible for a monthly pension regardless of service length. The scheme also offers pension benefits to the member's family in the event of their death, either before or after the pensionable service period.

How to calculate your pension under EPS

Your pension depends on your pensionable salary and service duration. The formula is:

Member’s Monthly Pension = (Pensionable salary x Pensionable service) / 70

Pensionable salary

Pensionable salary is the average monthly earnings in the last 60 months before leaving the EPS. Non-contributory periods within these 60 months are excluded from calculations. The maximum pensionable salary is capped at Rs. 15,000 per month, and 8.33% of this salary is contributed to the EPS account, amounting to Rs. 1250 monthly.

Pensionable service

Pensionable service is the total period a member has worked. This includes periods across different employers, provided the member obtains and submits an EPS Scheme certificate when changing jobs. If a member withdraws their EPS amount before completing 10 years and joins another company, the service period resets to zero. The service period is assessed every 6 months. For instance, 7 years and 3 months count as 7 years, while 7 years and 11 months count as 8 years.

Pension forms under EPS

Form 10C: Used for withdrawing funds before completing 10 years of service.

Form 10D: Used for monthly pension withdrawals after reaching 50 years of age, and for other pensions like widow and child pensions.

Non-remarriage certificate: A form declaring that the widow/widower has not remarried.