Major EPS Amendment: Central Government Expands Withdrawal Benefits for Short-Term Employees
The Central government has introduced significant changes to the Employees Pension Scheme (EPS) of 1995, now allowing withdrawal benefits for employees with less than six months of service. This amendment aims to benefit over 7 lakh EPS members who leave the scheme within this short duration.
Previously, the EPS only allowed withdrawal benefits for employees who had completed at least six months of contributory service. This mandatory requirement led to many claims being rejected, leaving those who left the scheme early without any benefits. In the financial year 2023-24 alone, approximately 7 lakh claims were denied for this reason.
Key Changes in the EPS Amendment:
- Withdrawal Benefits for Less Than Six Months of Service:
- Employees who leave the EPS with less than six months of service can now withdraw their benefits. This change is expected to assist more than 7 lakh members.
- Modification of Table D:
- The government has modified Table D, which now ensures that service for every month is considered, and withdrawal benefits are given proportionally based on the service provided.
- This change addresses members who do not meet the scheme’s eligibility requirements or those reaching the age of 58.
- Proportional Calculation of Benefits:
- The amount that can be withdrawn will now depend on the exact number of months a member has completed and the wages on which EPS contributions were made.
Impact and Benefits:
- The amendment is expected to benefit more than 23 lakh employees by simplifying the payment system and addressing discrepancies in withdrawal amounts.
- The previous system didn’t consider fractional periods of service under six months after each year, which often led to fewer withdrawals.
- With the modification, more accurate withdrawal amounts will be provided, ensuring fairness for all members.
Background of the EPS:
The Employee Pension Scheme was introduced in 1995 for employees in the organized sector. Both employers and employees contribute to the fund, which is managed by the Employee Provident Fund Organisation (EPFO) under the Ministry of Labour and Employment. Employees eligible for the Employee Provident Scheme are also eligible for the pension scheme.
Current Statistics:
- Each year, over 95 lakh EPS members leave the scheme before completing the mandatory ten years of contributory service required for a pension. These employees are given withdrawal benefits according to the Employee Provident Scheme.
- In the financial year 2023-24, more than 30 lakh withdrawal claims were settled.
This amendment marks a significant step towards providing fair and proportional benefits to all EPS members, regardless of their length of service, ensuring that even those with short-term employment receive their rightful dues.
FOR MORE FINANCIAL UPDATE CLICK HERE
Originally posted 2024-07-02 11:37:28.
