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  • Writer's pictureDhruv Parikh

EPS – Employee Pension Scheme and it’s benefits

Updated: Jul 25, 2022

The Employee Pension Scheme is an add-on to the Employee Provident Fund (EPF) subscription. A subscriber (employee) to the EPF contributes 12% of the Basic Salary + Dearness Allowance. The employer matches the contribution of 12%, of which 8.33% is contributed to EPS and 3.67% is contributed to EPF. The 8.33% contribution by the employer has multiple advantages for the subscriber.


The major advantages of EPS scheme for employees are:


  1. Pension on retirement age: a subscriber to the EPS becomes eligible for receiving monthly pension on reaching the age of 58 provided they have completed 10 years of service before attaining the age of 58. Form 10D is required to be filled for withdrawing the pension.

  2. Pension on leaving service before becoming eligible: In case the subscriber attains the age of 58 before completing 10 years in service, they can withdraw the entire amount by filling form 10C. This would be a one-time withdrawal; they will not get the benefits of a monthly pension.

  3. Pension on disability during service: a subscriber to the EPF scheme is eligible for monthly pension if they are permanently and totally disabled. In this case, the subscriber is eligible for the pension even if they have not completed the minimum number of years in the service to be eligible for pension. Even if the employer has paid pension for one month, the subscriber will be eligible for pension for lifetime.

  4. Pension for the family on death: in case of death of the subscriber, the surviving family members are eligible to receive certain benefits from EPS

    1. Widow pension: the widow of a subscriber is eligible to receive the pension on behalf of her late husband until her death or re-marriage. The monthly amount payable is approximately Rs. 2000 per month.

    2. Children pension: in addition to the widow pension, the surviving children can get 25% of the widow pension until they reach the age of 25 years. This benefit is available to a maximum of 2 children of the deceased subscriber.

    3. Orphan pension: in case the subscriber dies and has no surviving widow, his children will be entitled to get the monthly orphan pension of 75% of the value of monthly widow pension. This benefit will be applicable for two surviving children from oldest to youngest.

  5. Early Pension: a subscriber can opt for receiving an early pension if they have achieved the age of 50 years and have at least spent 10 years as a contributing member to the EPS. The amount of pension in such a case will be reduced by 4% for each year that is remaining before attaining 58 years age for the subscriber. For example, if the subscriber wishes to take pension at the age of 54, they will get 84% of the pension amount [100% - (58 - 54) * 4% = 84%].


Process to calculate monthly Pension

Employees joining EPS before 16 November 1995: pension amount is calculated basis the formula:

EPS = (Service Period * Last drawn Basic Salary) / 70


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