Employee Pension Scheme – It is a a defined benefit plan and is also known as EPS. A part of the employer contribution at 542 per month, being 8.33% of the pay, is remitted towards the pension scheme. The pay for this purpose is limited to 6,500 per month. The central government adds in a contribution of 1.16% to the pension fund of the employee. To be eligible for pension, contributions should be made for a minimum period of 10 years.
The monthly pension is available on retirement at the age of 58. Early pension is also possible from 50 years of age. The monthly pension for those who became members of the scheme after November 16, 1995 will be the pensionable salary multiplied by the pensionable service divided by 70.
For those who became members before November 16, 1995, the pension sum will be as above or 635 per month, whichever is higher plus the past service pension computed in a gradated manner as provided in the Act.
The total pension shall be subject to a minimum of 800 per month for eligible service of 24 years. The pensionable salary for calculating the pension will be the average of the last 12 months’ pay, limited to 6,500 per month unless a higher contribution has been made at the option of the employer and employee.
The above provisions are as applicable to domestic workers. The ministry of labour and employment has introduced the concept of international workers (IWs) effective from November 1, 2008.
Foreign citizens employed with an entity to which the provisions of PF Act applies as well as Indian outbounds to countries with which India has signed a social security agreement ( SSA) would be considered as IWs. Withdrawal norms relating to IWs have recently been tightened and IWs may now withdraw the funds only on:
1) Retirement at the age of 58
2) Specified medical grounds subject to documentation.
Also, contributions to pension in the case of IWs would be at 8.33% of the pay.
The limit of 6,500 per month as indicated for domestic workers above is not applicable to International Workers.