EMPLOYEES PENSION SCHEME 1995

Introduction
Provident Fund Provident fund is a fund that provides benefits to the employees of a company (who are members of the fund), upon termination of their employment. Both the employees and the employer are required to make contributions to the fund in accordance with the predetermined rates. To become eligible for membership of the fund, a worker must have completed one year's continuous service or have worked for 240 days during a period of 12 months.The employees have to contribute at a certain rate of the basic wage,dearness allowance and retaining allowances. Similarly,employers also contribute at the same rate. In India,the governing Act relating to provident fund is the Employees' Provident Funds & Miscellaneous Provisions Act, 1952 (EPF & MP Act). It was enacted with the main objective of making some provision for the future of the industrial workers after their retirement and for their dependents in case of death. This Act applies to the whole India except Jammu & Kashmir. It is applicable to every establishment which is engaged in any one or more of the industries specified in Schedule I of the Act or any activity notified by Central Government in the Official Gazette and employing 20 or more persons. The Act provides insurance to workers and their dependents against risks of old age, retirement, discharge, retrenchment or death of the workers. Presently, three schemes are in operation under the Act and are administered by the Central Board of Trustees. The three schemes taken together provide to the employees an old age and survivorship benefits, a long term protection and security to the employee and after his death to his family members, and timely advances including advances during sickness and for the purchase/construction of a dwelling house during the period of membership. These three schemes are as follows:

Employees' Provident Fund Scheme, 1952 :- This seeks to provide financial security for employees in an establishment by providing a system of compulsory savings. The scheme covers employees getting wages not exceeding Rs. 6,500 per month. The scheme takes care of following needs of the members of the fund:- (i) Retirement;(ii) Medical Care;(iii) Housing; (iv) Family obligation;(v) Education of Children; and (vi) Financing of Insurance Polices. However, a death relief fund has been set up under the Employees Provident Fund Scheme to provide relief to the nominees or heirs of the deceased member.

Employees' Deposit Linked Insurance Scheme, 1976 :- The Central Government with the motive of providing additional Social Security in the form of Life Insurance to the family of the deceased member of the Provident Fund, introduced the Employees Deposit Linked Insurance Scheme. Under it,on the death of an employee, while in service, who is the member of the Employees Provident fund, the persons entitled to receive the provident fund accumulations would be paid an additional amount equal to the average balance in the provident fund account of the deceased during the preceding 12 months.

Employees' Pension Scheme, 1995 (replacing the Employees' Family Pension Scheme, 1971) :- A pension (also known as superannuation) is a retirement plan intended to provide a person with a secure income for life .It can also be defined payments or benefits attributable to employees at the time of retirement, during old age, at the time of permanent disablement or in the form of family pensions in case of death of the worker,etc. The Employees Pension Scheme was introduced for the industrial workers wherein pension at the rate of 50 percent pay is payable to the employees on retirement on completion of 33 years contributory service. A minimum 10 years service is required for entitlement to pension. In case of death of an employee, the scheme provides for grant of pension to family members on the basis of salary and service of the employee. The scheme was financed by diverting a portion of the employers' and employees' contribution to the Employees Provident Funds with an additional contribution by the Central Government.

The Employees' Provident Funds & Miscellaneous Provisions Act, 1952 (EPF & MP Act) is administered by the Central and State Governments along with the Central Board of Trustees and Committees and Employees Provident Fund Organization(EPFO). The Employees' Provident Fund Organisation(EPFO), India, is one of the largest provident fund institutions in the world in terms of members and volume of financial transactions that it has been carrying on. It is an autonomous tripartite body under the control of Ministry of Labour, Government of India with its head office in New Delhi. The EPFO aims to extend the reach and quality of publicly managed old-age income security programs through its consistent efforts and ever-improving standards of compliance and benefit delivery system to its members. This way it seeks to contribute to the economic and social well-being of the country.

THE EMPLOYEES' PENSION SCHEME From and out of employer's share of Provident Fund contributions 8.33% of the total wages limited to Rs. 6500/- per month is segregated and credited to the Employees' Pension Fund in A/C No. 10 The Central Government also would contribute at the rate of 1.1 / 6% of total wages.

CONTRIBUTION No separate contribution is payable additionally by the member for the Pension Scheme benefits. The new Pension Scheme, alike the old Employees' Family Pension Scheme, 1971 derives its financial resource by partial diversion from the Provident Fund contribution, the rate being 8.33% in lieu of 2.33% against the old ceased Family Pension Scheme-1971.The Central Government continues contributing at the rate of 1.16% as before, on wages at the end of the year. Eligibility to Membership: a) Employees' Provident Fund Scheme: 1. Every employee (including part-time workers and those employed by or through contractors) shall be entitled to become a member of the Scheme from the date of joining the factory or the other establishment. (Para 26) 2. Every excluded employee shall be entitled to become a member from the date he ceased to be such employee. 3. Every member of an exempted Provident Fund on joining establishment to which the Scheme applies. 4. Any employee who is not otherwise eligible to become member of the Scheme, on request by him and his employer. 5. Every newspaper employee other than an excluded employee shall be entitled to become member of the Fund after completion of 3 months continuous service or if he has actually worked for 60 days during 3 months or less (There is no wage ceiling in the case of newspaper employee). (Para 80) 6. Every Cine Worker other than an excluded employee shall be entitled to become a member of the Fund if he has worked in not less than three feature films with one or more producers provided his pay at the time of joining the Fund does not exceed Rs. 1600/-P.M or Rs.15,000/- per year. (Para 81) Note: w.e.f 1-11-90 , an employee is eligible for membership from the very first date of joining a covered establishment. a) Employees' Pension Scheme: 1. Every employee who became member of the Employees' Provident Fund Scheme on or after 16-11-95. (Employee who is above the age of 58 on the date of joining the Employees' Provident Fund Scheme shall not be enrolled).

2. Every employee who is a member of Employees' Provident Fund Scheme 1952 and who has not opted for erstwhile Employees' family pension scheme, may also become a member if he opts for Employees' Pension Scheme. 3. Every employee who was a member of Employees' Provident Fund Scheme and has left service between 1-4-93 and 15-11-95 can also join the Employees' Pension Scheme by submission of option. Note: The Employees' Pension Scheme membership will cease from the date the member attains 58 years of age . However, he will continue to be a member of Employees' Provident Fund till he leaves the service and withdraws the Provident Fund accumulations. c) Employees' Deposit Linked Insurance Scheme: Every employee who become member of the Employees' Provident fund Scheme/exempted Provident Fund Scheme.

BENEFITS Newly introduced Employees' Pension Scheme-95 provides for following benefit package:
1. Pension for life to the member, on superannuation/retirement invalidation. 2. To the members of the family upon death of the member: and

a. Pension to Widow/Widower for life or till re-marriage. b. To children/orphan, two at a time additionally upto 25 years of age simultaneously with widow/widower pension. c. Children/orphan with total and permanent disability shall be entitled to payment of children pension or orphan pension as the case may be irrespective of age and number of children in the family. d. Facility for payment of pension to nominee in the event of member who is unmarried or without any eligible family member to receive pension, and e. Facility for payment of pension to dependent father/mother in the event the member dies leaving behind no eligible family members and no nomination by such deceased member exist. 3. Facility for capital return (corpus accretion) on option formula basis 4. Commutation of pension up to 1/3rd of pension amount 5. Scheme Certificate to retain membership of the Scheme till attaining the age of 58 years.

Superannuation/retirement pension under the new scheme will be payable on fulfilling:a. Minimum 10 years eligible service and b. Attaining age of 58 years.

On ceasing employment earlier than 58 years, pension may be availed of by a member at his option, before attaining the age of 58 years but not below 50 years. Such early pension will be subject to discounting factor. However, no such age restriction or eligibility requirement shall apply for pension entitlement on disablement or pension payable to the family members on death of the member. Membership with one contribution is enough in such cases.

Form No 10C

Sect/ rule

Description

Purpose For claiming : Refund of Employer share, Withdrawal benefit, Scheme certificate for retention of membership To be submitted by a member to withdraw his Provident Fund dues on leaving service/retirement/termination This is given by PF Members and utilised for releasing PF dues to the nominees. It also contains the details of the family members Consolidated Return of employees who are entitled and required to become members of the Pension Fund on the date the Pension comes into force. Within 15 days of coverage. Return of ownership to be sent to the Regional Commissioner. (in duplicate) Within 15 Days of coverage

Frequency of filing

Whom to submit

If not submitted

10D

3PS

Nomination form. (Common form for PF & Pension schemes.) The Employees' Pension Scheme 1995[para 20 (i)]. The Employees' Provident Funds Scheme , 1952 [para 36(a)] and the Employees' Pension Scheme 1995[para 21] The

One time Return

5A

One time Return

F4(PS)

Monthly

F5(PS)

10

12A

Employees' Deposit Linked Insurance Scheme, 1976 [para 10] . A return of members joining service during the month. The Employees' Pension Scheme 1995[para 20 (2)]. (leaving) The Employees' Provident Funds Scheme , 1952 [para 36 (2)(a) & (b) The Employees' Provident Funds Scheme, 1952 [para 36(1)] and the Employees' Pension Scheme 1995[para 20(4)] and The Employees' Deposit Linked Insurance

Within 15 days of close of every month.

Return of Members Leaving Service During the Month. Within 15 days of close of every month.

Monthly

Return of members leaving service during the month

Monthly

Consolidated Statement of dues and remittance By 25th of the following month to which the dues relate.

Monthly

F7(PS)

Scheme, 1976. The Employ ees Pension Scheme 1995[para19 ].

F8(PS)

The Employ ees Pension Scheme 1995[para 20].

3A

6A

The Employees' Provident Funds Scheme , 1952 [para 35 & 42] and the Employees' Pension Scheme 1995 (Para 19) The Employees' Provident Funds Scheme , 1952 [para 43] and the Employees' Pension Scheme 1975[para 20]

Contribution card for members for the year: Form showing month wise recoveries towards Pension Fund in respect of a member for one financial. To be furnished by the employer before 30th April of the following year. Consolidated annual contribution statement: This form provides annual contributions of each member of the establishment. A vital form for compiling the annual PS statement of a subscriber to be submitted by 30th April of the following years Member's annual Contribution card: Form showing month wise recoveries towards E.P.F and Pension Fund in respect of a member for one financial year. To be furnished by the employer before 30th April of the following year.

Annual

Annual

Annual

RPFO

Consolidated annual contribution statement: This form provides annual contributions of each member of the establishment. A vital form for compiling the annual Provident Fund statement of a subscriber. To be submitted by 30th April.

Annual

F9

11

The Employees' Pension Scheme 1995[para 24] . The Employees' Provident Funds Scheme, 1952 [para 34].

Declaration by a person taking Occasional up employment in an Returns establishment in which the Employees' Pension Scheme is in force. Declaration by a person taking Occasional up employment in an Returns establishment in which the Employees' Provident Funds & Family Pension Fund Scheme is in force.

Forms Form 10 C Form 10 D 2 Returns One time Return on Coverage 3PS See 5A also Monthly F4(PS) F5(PS) See 10 also See 12A also Annual F7 (PS) F8(PS) See 3A also See 6 A also Occasional Returns F9 See 11 also

Sources: http://business.gov.in/manage_business/provident_fund.php http://www.epfovadodara.com/ http://www.epfindia.com/