Under the EPS, participants who left the scheme before 10 years were eligible for withdrawal, but those leaving within 6 months were not allowed to withdraw their contributions. This regulation has now been updated.
The central government has revised the Employees’ Pension Scheme (EPS), 1995, as of Friday. Members with contributions of less than 6 months can now withdraw their money. This adjustment will benefit millions of EPS members. Annually, many EPS participants leave the scheme before completing the required 10 years of contributory service for a pension, with a notably high number leaving within 6 months.
Under EPS, those who left the scheme before 10 years were allowed to withdraw their contributions. However, those who exited within 6 months were not eligible for this benefit. The government has now revised this rule, offering significant relief. The new amendment will benefit over 7 lakh EPS members annually, who leave the scheme after contributing for less than 6 months.
The government also changed this rule
The government has revised the EPS details to enhance the scheme. Now, withdrawal benefits will be based on the duration of service and the EPS contributions made on the salary. This rule simplifies the withdrawal process and will benefit over 2.3 million EPS members.
What was the rule earlier?
Till now, the withdrawal benefit was calculated on the basis of the period of contributory service in completed years and the salary on which EPS contributions have been paid. Members were entitled to such withdrawal benefits only after completing 6 months or more of contributory service. As a result, members leaving the scheme before contributing for 6 months or more did not get any withdrawal benefit.
7 lakh claims rejected
Due to the old rule, many claims were rejected as many members were exiting without less than 6 months of contributory service. According to the government notification, about 7 lakh claims of withdrawal benefit 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 by 14.06.2024 will be entitled to withdrawal benefits.
What is EPS?
Often people get confused about EPS. Actually this is a pension scheme, which is managed by EPFO. Under this scheme, contribution has to be made for 10 years, then you become entitled to pension after retirement. Existing and new EPF members are included under this scheme.
Both the employer/company and the employee contribute equally to the EPF fund at 12% of the employee’s salary. However, the entire share of the employee’s contribution goes to EPF and 8.33% of the employer/company’s share goes to the Employees’ Pension Scheme (EPS) and 3.67% to EPF every month. Pension benefits will be given after completing at least 10 years of service and after retirement.
