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It is a common misconception among salaried employees that if Provident Fund (PF) is being deducted from their salary, then after the age of 58 years, they will compulsorily get pension every month. According to the rules of the Employees Provident Fund Organization (EPFO), not every employee who contributes to EPF gets a monthly pension for life.

To get pension, an employee has to fulfill several legal conditions and service period standards prescribed under the Employee Pension Scheme, 1995 (EPS-95). If an employee does not fulfill these conditions, his pension account is closed and only the deposited amount is returned to him (Withdrawal Benefit), he does not get the benefit of lifelong pension.

Every month, 12% of the employee's basic salary and DA (Basic + DA) is deposited in the PF account. The same amount of 12% is also deposited by the employer (company). But 12% of the company's stake is divided into two different accounts:

• 3.67% share: Goes directly into the Employee Provident Fund (EPF) account (which earns interest annually).

• 8.33% share: Goes to the Employees Pension Scheme (EPS). (This amount is usually fixed at ₹1,250 per month, subject to a maximum statutory salary limit of ₹15,000).

Monthly pension after retirement is calculated from this 8.33% share.

To receive pension every month from EPFO, an employee has to fulfill these three main parameters:

• 1. Minimum 10 Years Pensionable Service: This is the most important rule. It is mandatory for the employee to contribute to EPS for at least 10 years. This service does not have to be continuous; If you have transferred your UAN and PF while changing jobs in different companies, then the service period of all the companies gets linked.

• 2. 58 years of age (regular pension): When an employee completes the age of 58 years, he becomes eligible for full monthly pension (Regular Superannuation Pension).

• 3. Age of 50 years (Early/Reduced Pension): If an employee has completed 10 years of service and leaves the job before the age of 58 years, he can take a reduced pension from the age of 50 years. However, the number of years the pension will be taken before the age of 58, the pension amount will be increased for every year. Lifetime deduction of 4% Is performed.

If the total service of an employee is less than 10 years (like 3, 5 or 8 years) and he leaves the job, he is eligible for monthly pension. No will be. In such a situation he has two options:

1. Pension Fund Withdrawal Benefit: If he does not intend to take up a job in future or is unemployed for more than 2 months, he Form 10C After filling, you can withdraw the entire amount deposited in EPS along with interest in lump sum.

2. Scheme Certificate: If he is going to work in any other company further, he can take 'Scheme Certificate' through Form 10C. On submitting this certificate in the next job, the old service will be linked to the new service and after completion of 10 years, one will become eligible for pension.

There are also some special exceptions in the EPFO ​​rules where the minimum service requirement of 10 years does not apply:

• In case of death of an employee while in service: If an EPF member dies suddenly while in service (even if he has worked for only 1 month), his spouse will be Widow Pension and two children (up to the age of 25 years) Children Pension It starts immediately.

• Permanent Disability (Disability Pension): If an employee becomes totally and permanently disabled while in service, he is provided monthly disability pension for life without any condition of minimum service.

The monthly pension under EPS is determined based on this official formula:

$$\text{Monthly pension} = \frac{\text{Pensionable service (in years)} \times \text{Pensionable salary}}{70}$$

• Pensionable Salary: It is the average of Basic Pay + DA of the last 60 months (5 years) immediately preceding retirement (capped at a maximum statutory limit of ₹15,000).

• 2 Year Bonus: If an employee has contributed to EPS for 20 years or more, an additional bonus of 2 years is added to his total service period.

• Minimum Pension: Under EPFO ​​rules, the minimum pension is currently fixed at ₹1,000 per month.