Explained: Family pension under EPFO’s Employees’ Pension Scheme (EPS)
Under the EPS, a deceased employee's surviving spouse and children, and in their absence, their parents, are entitled to a family pension to support their financial requirements.
Money Poise
The money you put away in a provident fund each month through your company serves as a nest egg for your retirement and a safety net for your loved ones in case you lose your job. Pensions are given monthly to employees upon retirement (at age 58), and are also provided to surviving family members in the event of the employee's death.
Pension under Employees’ Pension Scheme
Employees' base pay (and dearness allowance, if applicable) is increased by 12% each month to account for EPF contributions made by their employers. Workers receive their share of the fund's corpus when they retire. Employees' contributions are matched by their employers, with 8.33 percent going into the Employees' Pension Scheme (EPS).
Except if you elected a higher pension on actual basic pay before the window ended on July 11, 2023, the maximum basic salary that may be used in this computation is Rs 15,000 (which means Rs 1,250 flows into your EPS). After ten years of EPS membership, you become eligible for a pension. You will begin collecting your pension at the age of retirement based on the following formula: [Pension= (pensionable salary (that is, average of last 60 months X pensionable service)/70].
The nitty-gritties of family pension
The Employees' Pension Scheme, 1995 provides pension benefits not just to the member employee but also to the member's spouse and dependent children in the event of the member's death either before or after retirement.
What is family pension?
The pension formula guarantees payments to the pensioner from the time of retirement until the pensioner's death. If she or he passes away, the pension won't immediately stop. Any dependents under the age of 25 will be able to share in the pension with the spouse.
Even if the EPS member only made one pension payment before his or her death, the pension will be paid out to the beneficiary. A minimum guaranteed pension of Rs 1,000 per month will be paid to the employee's spouse in the event of the employee's death while still employed.
Who is eligible to receive it?
Family members under the meaning of EPS 95 include a spouse and any dependent children under the age of 25. Children that have been officially adopted by EPS members are also included in this description. A 'widow' pension is given to the surviving spouse of a pensioner and continues until the surviving spouse remarries or dies. Children's pension will be converted to an orphan's pension, which is larger, if the person remarries.
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What if the EPS member is single?
In such a circumstance, the widow's pension would first go to the dependent father, then the dependent mother. There is no way for a member or retiree to put forth a specific candidate. Only the spouse and children of an EPS member will receive benefits, regardless of whether or not the member is married or has children.
Any beneficiary designation made before marriage will be null and void, and the spouse and any minor children will automatically be named as beneficiaries.
How is pension for the spouse calculated?
She/He will receive up to fifty percent of the pension to which the member was entitled. 25 percent of this 'widow' pension will be allocated to the children.
What is the amount of payout made to children?
The monthly pension for children will be equal to 25% of the widow/widower pension. This amount will only be paid until the child reaches 25 years old. Additionally, only up to two children are eligible for this pension at any given moment. If a member's child is permanently and utterly disabled, he or she will receive the amount for life, regardless of the number of other children in the family.
If both parents are deceased, the 'orphan' pension will increase to 75% of the widow's pension. For children's pension, a distinct bank account must be established. If both parents were EPS members, these offspring will receive a 'double' pension.
What are the documents that the nominees would need to claim family pension?
They will require the pensioner's death certificate, copies of the beneficiaries' Aadhaar cards and bank account information, as well as evidence of age documents for children.
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Is the marital status of children taken into account for paying family pension?
No. The only requirement is that they are under 25 years old.
