On June 28, 2024, the Government of India announced significant amendments to the Employees Pension Scheme (EPS), 1995. These changes aim to provide fairer withdrawal benefits to EPS members, particularly those with less than 6 months of contributory service.
Key modifications include the following:
Enhanced Benefits for Shorter Contributory Service
- Withdrawal Benefit for Less than 6 Months: The amendment ensures that EPS members who have less than 6 months of contributory service will now receive a withdrawal benefit. This change is expected to benefit over 7 lakh EPS members annually who previously left the scheme with no benefits due to insufficient contributory service.
Rationalization of Withdrawal Benefit Calculation
- Modification of Table D: The Central Government has revised Table D to better reflect the withdrawal benefit based on completed months of service, rather than years. This adjustment means:
- Proportionate Benefits: Members will now receive a proportionate withdrawal benefit based on the actual number of completed months of service and the wages on which EPS contributions were made.
- Fairer Calculation: Previously, only complete years of contributory service were considered, and fractional periods less than 6 months were ignored, resulting in lower benefits. With the new Table D, every completed month of service will be accounted for, ensuring fairer and more accurate benefits.
Impact on Members
- Increased Benefits: The modification of Table D will result in higher withdrawal benefits for many members. For example, a member with 2 years and 5 months of contributory service, previously entitled to Rs. 29,850, will now receive Rs. 36,000.
- Reduced Claims Rejections: The changes address the issue of claim rejections due to insufficient contributory service. In the financial year 2023-24 alone, around 7 lakh claims were rejected for this reason. With the new rules, members leaving the scheme with less than 6 months of service will now receive benefits.
Scope of Benefit
- Annual Beneficiaries: It is estimated that over 23 lakh members will benefit annually from the modification of Table D.
- Eligibility: EPS members who have not reached the age of 58 years as of June 14, 2024, will be entitled to the revised withdrawal benefits.
These amendments aim to provide more equitable benefits to EPS members, particularly those with shorter periods of contributory service. By modifying the calculation method and ensuring all completed months are considered, the Government of India has taken a significant step towards improving the fairness of the Employees Pension Scheme.
