look news india
The central government on Friday made changes in the Employees' Pension Scheme (EPS), 1995. Now even members who have contributed for less than 6 months can withdraw money. This change will benefit lakhs of EPS employees. In fact, every year lakhs of EPS members leave the scheme before completing the 10 years of contributory service required for pension. Among these, the number of those who leave the scheme within 6 months is high.
Under EPS, withdrawal facility was given to those who left the scheme before 10 years, but those who left the scheme before 6 months were not given the facility of withdrawal on their contributions. However, now the government has made some changes by giving big relaxation in this rule. The new reform will benefit more than 7 lakh EPS members every year, who leave the scheme after less than 6 months of contributory service.
The government also changed this rule
The government has also revised the EPS details to further improve the scheme. From now on, the withdrawal benefit will depend on the number of months of service rendered by the member and the amount of EPS paid in salary. This rule will make withdrawal easier. More than 23 lakh EPS members will benefit from this change.
What was the rule earlier?
Till now the exit benefits were calculated based on the period of contributory service and the salary paid as EPS contributions in completed years. Members were entitled to such exit benefits only after completing 6 months or more of contributory service. As a result, members who left the scheme before contributing for 6 months or more did not get any exit benefits.
7 lakh claims rejected
Many claims were rejected due to the old rule as many members exited without less than 6 months of service. According to a government notification, about 7 lakh claims for withdrawal benefits were rejected due to less than 6 months of contributory service during the financial year 2023-24. Now these EPS members who have not attained the age of 58 years as on 14.06.2024 will be entitled to withdrawal benefits.
What is EPS?
People often get confused about EPS. Actually it is a pension scheme, which is managed by EPFO. Under this scheme, one has to contribute for 10 years, then you become entitled to pension after retirement. Existing and new EPF members have been included under this scheme.
Both the company and the employee contribute 12% of the employee's salary to the EPF fund. However, the entire employee contribution goes to the EPF and 8.33% of the employer/company's share goes to the Employees' Pension Scheme (EPS) and 3.67% goes to the EPF every month. Pension benefits will be provided after completing at least 10 years of service and after retirement.