Even though the monthly salary amount mentioned on paper is something but the in-hand salary seems to reach the employee after various deductions. For private sector employees, one of these deductions is a fund that's kept aside for long-term financial security. The Provident Fund serves as a key instrument for this purpose. Beyond savings, it also offers pension benefits after retirement, subject to specific eligibility conditions.
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Who is eligible for EPS pension
Provident Fund account holders receive pension under the Employees’ Pension Scheme, 1995 or EPS-95. This is managed by the Employees’ Provident Fund Organisation. All EPF members, both new and existing, are covered under this scheme. However, the length of service is the most crucial factor in determining pension eligibility.
According to the EPFO rules, an employee needs to complete at least 10 years of service to qualify for pension. Where a service period of 9 years and 6 months is treated as 10 years. However, if the total service is less than 9 years and 6 months, it is counted as 9 years. In such cases, the pension amount can be withdrawn before retirement, but the individual will not receive a monthly pension.
Key rules on service period and UAN
The Employees’ Pension Scheme is a social security initiative that came into effect on November 19, 1995. It is aimed at providing retirement protection to employees in the organised sector. Under normal provisions, the pension is payable after the age of 58.
Questions often arise about having gap in the service periods. For instance, if someone works for five years in two different organisations, will they qualify for pension? According to the rules, even with employment gaps, pension eligibility can be maintained if the total service period adds up to 10 years. The key condition is that the same Universal Account Number must be used across all employments.
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The Universal Account Number(UAN) is a 12-digit permanent number issued by EPFO. Even if an employee switches jobs, it remains unchanged. Multiple Member IDs may be linked to a single UAN, ensuring that all PF contributions remain consolidated under one account.
