Retirement planning should be started as early as possible. There are various way to plan your finances for retirement. Some of them include EPF (employees provident fund), PPF (public provident fund), NPS (national pension scheme), and SIP (systematic investment plan) in mutual funds. However, individuals mostly get confused about where to park their spare money to save funds for retirement. In this article, we will talk about Employees’ Pension Scheme (EPS) which provides a secure retirement income for organised sector employees. Know what will be your monthly pension with a basic pay of Rs 40,000, 30 years of pensionable service & current age of 30.

What is EPS?

It is a retirement plan that provides a monthly pension to employees. In this scheme, returns are guaranteed and all EPF members are enrolled automatically.

Contribution in EPS

8.33 per cent of the employer’s contribution is allocated to EPS, and the remaining 3.67 per cent goes to the EPF. The maximum contribution limit is 12 per cent.

What is the eligibility for EPS?

A person should be an EPFO member to get the EPS pension.
Service period: Minimum 10 years
Early pension: AT 50 years
Full pension: At 58 years

How to receive EPS pension

An employee has to fill out Form 10D and receive an EPS Certificate to start receiving EPS pension.

What happens if an EPFO member can’t complete 10 years of service before turning 58?

If an employee can’t complete 10 years of service before turning 58, they can withdraw the entire amount at the age of 58 using Form 10C.

Do they get monthly mention in such case?

In the above-mentioned scenario, an employee will not be able to get monthly pension. For that, they need to complete 10 years of service.

Is there any capping on monthly EPS pension?

Yes, you can receive a maximum of Rs 15,000 monthly pension in EPS.

What is the minimum EPS pension amount?

The minimum amount is Rs 1,000 per month.

40,000 basic salary, 30 years of service, what will be your monthly EPS pension amount?

As per the EPS pension formula (Pensionable salary X years of service/70), the monthly pension will be Rs 17142.8571429. However, there is a capping on monthly pensionable salary, so the contributor will receive a maximum of Rs 15,000 per month.