The Employees’ Provident Fund Organisation (EPFO), which administers the government’s retirement savings scheme for salaried individuals, provides pension benefit for all subscribers who have an account for more than 10 years. This is because of the 12% contribution to your EPF account by employer, 8.33% is directed towards your pension, i.e. EPS account.
According to the Employees’ Scheme 1995 (EPS 1995), a member who joins at 23 years and superannuates 58 years old, and contributing to the wage ceiling of ₹15,000 may receive around ₹7,500 per month as pension for 35 years of service. (Pensionable Salary X Pensionable Service)/70 = (15000×35)/70 = 7500
Notably, you can choose to delay pension payments till you reach 60 years of age, by either choosing to pause for two years (lumpsum earns 4% p.a. interest till 60 years, no interest after) or continue contributions for two years (higher accumulated amount means higher final payout).
At time of retirement, members can withdraw their (PF) amount in full and maintain annuity in the pension scheme by availing a Scheme Certificate. This is issued to members who withdraw their EPF contribution but wish to retain their membership with EPFO, to avail pension benefits after retirement.
Pension benefits: Form 10C — Eligibility, benefits, FAQs
What is Form 10C? EPF members who wish to withdraw their pension or obtain a need to fill and submit Form 10C. Subscribers can also use this form to avail pension in case of unemployment for more than two months, medical and other emergencies, while retaining membership with the retirement fund body.
Eligibility: Who can use Form 10C? The form can be used by a member who has retired before completing 10 years’ service, a member who has completed 58 years of age before completing 10 years in service, a member who has completed 10 years’ service but is below 50 years of age, a member between 50-58 years of age and wanting full , and family or nominee of a deceased member who passed after 58 years of age but did not complete 10 years of service.
What are the benefits of using Form 10C? Members get of pension withdrawal. Exceptions include members who accept reduced pension or who withdraw due to permanent disablement — both have to apply using Form 10D, according to a Clear Tax report.
What documents are needed to submit Form 10C? You will need to fill in your name, universal account number (UAN), number, PAN number, father / husband’s name, date of birth, date of joining, date of leaving, reason for leaving, bank account details, and postal address. You will also have to provide the following along with your Form 10C application:
- Copy of blank/cancelled cheque.
- Date of birth certificate cheque of children of the member, if applying for Scheme Certificate.
- In case of death, the member’s death, you will to submit the death certificate.
- Succession certificate, in case application, is made by the .
- Revenue stamp of ₹1 to be attached with the form.
EPF scheme: Key highlights
Rate of interest: The current and voluntary provident fund (VPF) interest rate is 8.25%.
Contributions: The scheme functions through joint contributions from both the employer and employee, wherein you receive the lump sum corpus at retirement.
Subscribers: Eligibility for an EPF account includes the mandatory enrolment of salaried individuals with basic pay and dearness allowance of up to ₹15,000. You can also opt for VPF if basic pay and exceed ₹15,000 per month.
Tax exemption: Employee contributions up to ₹1.5 lakh annually are exempt under Section 80C of the old tax regime. Employers’ up to 12% contribution (below ₹7.5 lakh) is exempt under the . There is no similar benefit at present under the new tax regime.
Tax benefit: Further, for employees, interest on accumulated contribution up to ₹2.5 lakh is tax-free, while interest on the employer’s contribution is tax-free.
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