Introduction
EPFO or the Employee Provident Fund Organisation offers an Employees' Pension Scheme (EPS) that helps you receive regular retirement income. Under this retirement benefit savings scheme, you pitch in 12% of your basic salary, dearness allowance, plus the retaining allowance, and the employer matches this. Out of this, 8.33% goes towards the Pension Fund and the remaining 3.67% gets contributed to the Employees' Provident Fund (EPF).
You then receive a lump-sum amount with the interest payments upon your retirement. How this return gets deployed to you differs based on the circumstances. Typically, you become eligible to receive a monthly pension when you turn 58 years. However, under specific conditions, you may also receive a pension at 50 years of age, given a completion of 10 years of service. Considering such varied possible scenarios, EPFO offers seven types of Employee Provident Fund Pension Plans to account holders.
7 Types of Pensions under EPFO for Account Holders
Here's a list of EPFO pension schemes suiting different situations with distinct eligibility and rules:
1. Early Pension
If you wish to retire early or have joined a non-EPF organisation after 50 years of age, you become eligible for an early pension. The criterion here is to have completed 10 years of service. However, this pension is 4% lower than the full pension you get upon completing 58 years.
This will be effective every year until you reach the age of 58 years. For example, if you are to receive Rs. 10,000 at 58, you will get 4% lower than that = Rs. 9,600 at 57, and 4% lower than that = Rs. 9,216, and so on.
2. Superannuation Pension
The superannuation pension is the most common type of EPFO pension. It is available to you if you have completed at least 10 years of service and have completed the age of 58.
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The pension is calculated based on the pensionable salary, which is the last 60 months of salary drawn before the maturity of the pension fund. Another factor is the pensionable service, which is the total duration of your employment.
3. Widow/ Child Pension
As an EPF account holder, your family is entitled to the pension amount in case of your death. The widow, and the two dependent children under the age of 25 years attain eligibility for EPFO pension.
If there are more than two children, the third and/or fourth child can become eligible for a pension when the first two turn 25 and, therefore, become ineligible under the scheme. The same cycle, then, continues for the third or fourth child until they turn 25.
4. Orphan Pension
In the case of the EPF holder's death, followed by the wife's demise, the dependent children lack financial support. Considering this perspective, the EPFO monthly scheme allows the pension to the children under the orphan pension.
Two of your children are eligible for pension according to this arrangement. However, the condition of them being under the age of 25 applies here. Once they turn over 25 years, the pension will stop.
5. Dependant Parents' Pension
If you are single at the time of your demise and have no child, as an EPFO account holder, you can rest assured knowing your parents are financially supported.
Under the scheme, the immediate beneficiary of the pension amount, in such a scenario, is the father. After the father's demise, the mother becomes eligible for the pension amount. They remain eligible for pension for their entire lives.
6. Disabled Pension
Due to an unfortunate accident, if you were to lose bodily functionality either temporarily or permanently as an EPF pension holder, you receive the disabled pension.
Under this type of pension, you need not complete 10 years of service. Plus, the mandate of 50 or 58 years is no longer applicable. You become entitled to your pension amount, even if you have paid just one month of EPF contribution.
7. Nominee Pension
If you are unmarried and do not have children or any other legally dependent member, you can nominate a person to claim the EPF pension amount. You can do so by, filling out an e-nomination form on the EPFO website.
However, if, at a later stage, you marry and have children, the nominee becomes invalid. The nominee, in this case, can become eligible in the future event of the death of your dependant family members.
Conclusion
As noticeable, a variety of people can become eligible for EPFO monthly pension under different circumstances. So, as an account holder, the EPF scheme ensures you and your family's financial security. Whether it is early retirement, disability, or untimely death. Understanding these plans allows you to prepare accordingly. To bring the different types of pension transfers into effect, you or the eligible beneficiary can fill out form 10D.
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