EPF withdrawal benefits extended to members with under 6 months of service
New Delhi, Jun 28, 2024
The move is expected to benefit more than 700,000 EPS members every year who leave the scheme with less than six months of contributory service
The labour ministry on Friday amended the Employees’ Pension Scheme (EPS), 1995 to ensure that EPS members with less than six months of contributory service also receive withdrawal benefit.
The move is expected to benefit more than 700,000 EPS members every year who leave the scheme with less than six months of contributory service.
“Government of India has amended the Employees’ Pension Scheme (EPS), 1995 to ensure that EPS members with less than 6 months of contributory service also receive withdrawal benefit. This amendment will benefit more than 700,000 EPS members every year who leave the scheme with less than 6 months of contributory service,” said the labour ministry in a statement.
Besides, the government also modified the Table D under the scheme which lays down withdrawal benefit commensurate with the years of service. This has ensured that every completed month of service rendered is taken into account to give proportionate withdrawal benefit to the members.
“The amount of withdrawal benefit will henceforth depend upon the number of completed months of service rendered by the member and the wages on which EPS contribution was received. The above measure has rationalised the payment of withdrawal benefit to members. It is estimated that every year more than 2.3 million members will benefit from this modification of the Table D,” the statement added.
Every year, millions of EPS members leave the scheme prior to rendering the requisite 10 years of contributory service for pension. Such members are given withdrawal benefit as per the provisions of the scheme.
Till now, the withdrawal benefit was being calculated on the basis of the period of contributory service in completed years and the wages on which EPS contribution has been paid. Therefore, only after completing six months and above of contributory service, the members were entitled for such withdrawal benefit.
“Consequently, the members leaving scheme, before contributing for 6 months or more, used to get no withdrawal benefit. This was a cause of many claim rejections and grievances as many members were exiting without having less than 6 months of contributory service,” the statement also said.
During the financial year 2023-24, approximately 700,000 claims for withdrawal benefits were rejected due to contributory service being less than 6 months.
Earlier, the calculation under erstwhile Table D ignored the fractional period of service rendered for less than 6 months after each completed year. This resulted in lesser amount of withdrawal benefit in many cases.
With the modification of Table D, the Contributory service for calculating the withdrawal benefit will be now considered in completed months. This will ensure fair payment of withdrawal benefit.
[The Business Standard]
