In a move expected to benefit over 7 lakh individuals every year, the Central government announced that Employees Pension Scheme (EPS) members with less than six months of contributory service will also get withdrawal benefits.
Earlier the withdrawal benefit was calculated on the basis of the period of contributory service in completed years and the wages, those completing 6 months and above of contributory service, were entitled to withdrawal benefit. Members leaving the scheme before contributing for 6 months or more, used to get no withdrawal benefit.
The Centre modified Table D to this effect to ensure that withdrawal benefits are given in direct proportion to the service provided regardless of the minimum contributory service period. Table D dealt with members who have not offered the required service for the scheme's eligibility. The amendment will ensure more equitable payment of withdrawal benefits. For instance, a member taking withdrawal benefit after 2 years and 5 months of contributory service with wages of Rs 15,000 per month was earlier entitled to Rs. 29,850 withdrawal benefit. Now he will receive a Rs. 36,000 withdrawal benefit, the Ministry of Finance said in a release.
Impact of EPS Amendment
"It is estimated that every year more than 23 lakh members will benefit from this modification of the Table D. Every year, lakhs of EPS members leave the scheme prior to rendering the requisite 10 years of contributory service for pension," the official release said.
During the financial year 2023-24, approximately 7 lakh claims for withdrawal benefits were rejected due to contributory service being less than 6 months. Henceforth, all such EPS members who have not attained the age of 58 years as of 14.06.2024 will become entitled to withdrawal benefits, the ministry said.
Companies with over 20 employees must enrol in the Employees’ Provident Fund (EPF) scheme and deduct 12 per cent of employee salaries to be routed to the EPF scheme, with an equal contribution by employers. This scheme provides 8.25 per cent interest on the contributions. However, 8.33 per cent of the employer's contribution goes to the Employees Pension Scheme (EPS) which is used to provide them pension benefits.
