WHAT IS EPS (EMPLOYEE PENSION SCHEME)?
The
Employee Provident Fund Organisation (EPFO) has provided a social security
scheme called the Employee Pension Scheme (EPS). This scheme makes employees
working in the organised sector to be eligible for a pension after their
retirement at the age of 58 years.
WHY SHOULD ONE WITHDRAW OR TRANSFER PF AND
EPS AFTER LEAVING A JOB?
A
lot of people after quitting their jobs neither withdraw their PF, nor do they
get it transferred to their new employer. The reason being that they are under
the impression that their money is safe with the EPFO and they can keep earning
tax-free returns from it.
However,
in November 2017, the Bangalore bench of the Income Tax Appellate Tribunal made
the interest earned on an EPF account taxable after an employee quits their
job. Hence, an individualmust withdraw the EPF amount or transfer it to the new employer at the
earliest.
HOW TO WITHDRAW EPS?
Before
you start the withdrawal process, make sure you have merged your PF accounts
from all your previous organisations along with the current organisation. One
is allowed to withdraw the EPS if their service period has been less than ten
years. In case it has been more than ten years, the employee compulsorily gets
pension benefits after retirement.
To withdraw the PF and the EPS amount, here are the two processes recognised by
the EPFO:
- Withdraw
with Aadhar Card:
- Activate your UAN (Universal Account Number)
- Fill
your bank account details and your Aadhar card number on the UAN portal.
- Submit
a filled Form 11 (new) to your employer
- Submit
a filled Composite Claim Form (Aadhar) to the concerned EPFO office along
with a cancelled cheque.
- Withdraw
without Aadhar Card:
- Submit
two copies of Form 15G/15H if applicable.
- Furnish
your PAN card number if the service period has been less than five years.
- Furnish
your UAN if available, if not, then submit your PF account number.
- Submit
a filled Composite Claim Form (Non-Aadhar) to the concerned EPFO office.
Read also : FollowThese Simple Steps to Generate, Register, and Activate Your UAN
In addition to the above conditions, the withdrawal process will also depend on
the following terms and necessary changes will have to be made accordingly:
- Withdrawal of PF balance and EPS amount for less than 10
years of service – You can claim PF as well as EPS even if you have
completed less than 10 years of service. All you need to do is fill the
Composite Claim Form and choose the Final PF balance option and Pension
withdrawal option.
- Withdrawal of PF balance and EPS amount more than 10 years of
service – If you have served for more than 10 years, then you
are not eligible to withdraw the EPS amount, but you can fill the
Composite Claim Form and Form 10C to acquire the scheme certificate. You
can claim the pension after completing 58 years of age.
- Withdrawal of only PF balance and reduced pension age 50-58;
more than 10 years of service– If your age is between 50 to 58 years
and you have served more than 10 years at a company, then you can claim
for the early pension. All you must do is fill the Composite Claim Form
and 10D.
- Withdrawal of PF balance only and full pension after the age
of 58–If you have completed 58 years of age, and then this process
is straight and simple. You just have to submit Form 10D.
WHEN CAN YOU WITHDRAW PF BALANCE?
The
total PF amount is the total amount contributed by you- the employee and your
employer plus the accrued interest. As per the EPF act 1952, any person who
retires after completing service of 58 years minimum is eligible to withdraw
the full PF amount and claim the EPS amount.
HOW MUCH CAN A PERSON WITHDRAW FROM EPSACCOUNT?
In
case of lump sum withdrawal, the lesser the number of years of service, the
lower the amount a person will receive. The lump sum withdrawal from EPS is
allowed if the person has served less than 10 years. The amount returned to the
employee will be based on Table D- EPS Scheme 1995. The amount will be based on
the last drawn wages multiplied by the number mentioned in Table D.
Table D-
|
Service Years |
Proportion of Wages at Exit |
|
1 |
1.02 |
|
2 |
1.99 |
|
3 |
2.98 |
|
4 |
3.99 |
|
5 |
5.02 |
|
6 |
6.07 |
|
7 |
7.13 |
|
8 |
8.22 |
|
9 |
9.33 |
If
a person has served more than 10 years, then he/she will receive a certificate
of pension. The person will be eligible for a monthly pension.
IS EPS WITHDRAWAL TAXABLE?
If
a lump sum withdrawal is made, then it will be taxable.
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