- The Union Ministry of Labour & Employment has informed about the total enrollments under EPS.
About Employees Pension Scheme (EPS)
- EPS is a social security scheme that was launched in 1995 and is facilitated by EPFO.
- The scheme makes provisions for pensions for the employees in the organized sector after retirement at the age of 58 years.
- Employees who are members of EPFO automatically become eligible for EPS.
- Both employer and employee contribute 12% of employee’s monthly salary (basic wages plus dearness allowance) to the Employees’ Provident Fund (EPF) scheme.
- EPF scheme is mandatory for employees who draw a basic wage of Rs. 15,000 per month.
- Of the employer’s share of 12 %, 8.33 % is diverted towards the EPS.
Salient Features of the 2020 Amendment
- EPS pensioners will get normal pension even after getting a reduced pension due to commutation.
- On retirement, if the employee opts for commutation of pension, a portion is paid as a lump sum based on the commutation factor while on the balance the pension begins.
- In simple terms, commutation means a lump sum payment in lieu of periodic payments of pension.
- In such a case, the amount of pension will be lower than the amount of pension without any commutation.
- The amendment seeks to restore the original amount of pension as per the commutation table, after 15 years equal to the same amount as it would have been without commutation.