Bad news for salary taxpayers
Let's understand the Recent EPS Rule Changed in this video
The Ministry of Labour and Employment has issued two notifications amending the rules under the Employees' Pension Scheme (EPS). One of the notifications deals with the lump sum payment from the EPS scheme when a member quits before the completion of 10 years. Another notification is for those employees who are eligible to receive a pension under the Family Pension Scheme which existed before EPS.
The notification has revised 'Table D' which is used to calculate the lumpsum payment an employee is eligible to receive if he/she quits the pension scheme before completion of 10 years.
Earlier, if the employee was a member of a pension scheme for say 7 years or 8 months, the lump sum benefit would be received based on 8 years of service. Now, the employee will receive a lump sum benefit basis of no of Days Work Done. This may reduce the amount of benefit marginally."
According to Employees' Pension Scheme rules, a member of EPS is eligible to receive a pension provided he/she has completed 10 years of eligible service. In layman's terms, a member needs to contribute to EPS and EPF accounts for 10 years to be eligible to receive a pension. If an employee leaves the EPS scheme before the completion of 10 years, then a lump sum payment is given instead of a pension due to early exit from EPS.
As per the notified 'Table D' the lumpsum withdrawal benefit is now calculated based on the months of service completed by an individual. As per the earlier, 'Table D' the withdrawal benefit was calculated based on the number of years of service completed.