Employees’ Pension (Second Amendment) Scheme, 2024

The government of India, Ministry of Labour and Employment, vide notification dated 14th June 2024, has revised the table (‘Table D’) used for calculating lump sum withdrawal amount under the Employees’ Pension Scheme, 1995. A member of the Employees’ Pension Scheme can withdraw a lump sum amount if he/she exits the scheme before the completion of 10 years of service.

The notification has revised ‘Table D’ which is used to calculate the lump sum payment an employee is eligible to receive if he/she quits the pension scheme before the completion of 10 years. Earlier, if the employee was a member of the pension scheme, say for 5 years and 7 months, the lump sum benefit would be received on the basis of six (6) years of service. Now, the employee will receive the lump sum benefit on the basis of 67 months of service. This may reduce the amount of benefit marginally.

As per the notified ‘Table D’, the lump sum withdrawal benefit is now calculated on the basis of the months of service completed by an individual. As per the earlier ‘Table D’, the withdrawal benefit was calculated on the basis of the number of years of service completed. In the old rules, service exceeding six (6) months was considered as one (1) completed year.

According to the Employees’ Pension Scheme, a member of EPS is eligible to receive pension provided he/she has completed 10 years of eligible service. A member needs to contribute to EPS and EPF account for 10 years to be eligible to receive the pension. If an employee leaves the EPS scheme before the completion of 10 years, then a lump sum payment is given instead of pension due to early exit from EPS.

The ‘Table D’ provides the return on contribution corresponding to the number of months in service.