Context

• The Union Ministry of Labour & Employment has informed about the total enrollments under EPS.

About Employees Pension Scheme (EPS)

• EPS is a social security scheme that was launched in 1995 and is facilitated by EPFO.
• The scheme makes provisions for pensions for the employees in the organized sector after retirement at the age of 58 years.
• Employees who are members of EPFO automatically become eligible for EPS.
• Both employer and employee contribute 12% of employee’s monthly salary (basic wages plus dearness allowance) to the Employees’ Provident Fund (EPF) scheme.
• EPF scheme is mandatory for employees who draw a basic wage of Rs. 15,000 per month.
• Of the employer’s share of 12 %, 8.33 % is diverted towards the EPS.

Salient Features of the 2020 Amendment

• EPS pensioners will get normal pension even after getting a reduced pension due to commutation.
• On retirement, if the employee opts for commutation of pension, a portion is paid as a lump sum based on the commutation factor while on the balance the pension begins.
• In simple terms, commutation means a lump sum payment in lieu of periodic payments of pension.
• In such a case, the amount of pension will be lower than the amount of pension without any commutation.
• The amendment seeks to restore the original amount of pension as per the commutation table, after 15 years equal to the same amount as it would have been without commutation.

Source:PIB