Big changes in EPFO and EPS rules! Good news for frequent job switchers as the Centre has amended EPS rules regarding the withdrawal of money. Under the earlier rules, those with less than 6 months of service were not allowed to withdraw money contributed towards the Employees’ Pension Scheme. But now, even if you have less than 6 months of contributions made to EPS, you can withdraw your money.
Under the EPFO scheme, an employee working for a private organization contributes 12% of their basic salary towards the provident fund, and the employer is required to match the employee’s contribution. Of the employer’s contribution, 8.33% goes towards the employee’s pension corpus governed by EPS, while 3.67% goes towards the employee’s EPF corpus.
Also read: EPFO withdrawal rule changed: No more advance facility for THESE members – Know details
What has changed now?
Until now, if employees left their job before completing 6 months of service, they could only withdraw their EPF contribution and not the EPS money. However, now they will be able to withdraw both EPF and EPS contributions even if they leave the job before completing 6 months.
The centre has amended the Employees’ Pension Scheme (EPS), 1995 to ensure that EPS members with less than 6 months of contributory service also receive withdrawal benefits. This amendment will benefit more than 7 lakh EPS members every year who leave the scheme with less than 6 months of contributory service, according to a Labour Ministry release.
Further, the centre has modified Table D and has ensured that every completed month of service rendered is taken into account to give proportionate withdrawal benefits to the EPS members. Table D refers to members who have not met the required service for the scheme’s eligibility or have attained 58 years of age.
Withdrawal benefits will now depend on completed months of service
“The amount of withdrawal benefit will henceforth depend upon the number of completed months of service rendered by the member and the wages on which EPS contribution was received. The above measure has rationalized the payment of withdrawal benefits to members. It is estimated that every year more than 23 lakh members will benefit from this modification of Table D,” the PIB release said.
Every year, lakhs of EPS members leave the scheme before rendering the requisite 10 years of contributory service for pension. Such members are given withdrawal benefits as per the provisions of the Scheme. Under the EPS norms, the contributory service period for pension is 10 years.
More than 30 lakh withdrawal benefit claims were settled in the financial year 2023-24, the Labour Ministry said.
How were EPS withdrawal benefits calculated until now?
Till now, the withdrawal benefit was being calculated based on the period of contributory service in completed years and the wages on which EPS contribution has been paid, it said.
