The Employee Pension Scheme (EPS) is a social security plan run by the Employee Provident Fund Organisation (EPFO). An EPS account allows you to enjoy a steady pension in your golden years. In the event of your unfortunate demise, your nominees are also eligible to receive the pension. As it comes under the EPF, you must take appropriate action when switching jobs.
If you have an EPS account, you might be wondering if you need to transfer your existing EPS account to the new employer when switching jobs. As the EPS contributions go into a common pool, you do not need to worry about losing any previously accrued funds. However, if you want to transfer EPS funds to your bank account, you can do so with a few easy steps during the job transfer process.
Understanding EPS in Detail
Let’s understand how the scheme works in order to better understand the EPS transfer process.
- As stated earlier, it is a pension savings plan for the members of the EPFO. It pays a lifetime pension to these members, and in their absence, to their nominees. The main difference between EPF and EPS is that the employee does not contribute to EPS. Unlike EPF. Only the employer’s contribution is considered in EPS.
- As you may already know, the employer contributes 12% to an employee’s EPFO account. Out of this 12%, 8.33% is directed towards your EPS funds. The remaining 3.67% is invested in your EPF account.
- The employer contributions towards EPS go into a common fund. So, when you switch jobs, the fund stays the same. Only the source (the employer) changes. The money accumulated in this manner helps in ensuring a pension for the individual once they turn 58 years of age.
- The minimum pension allowed under the EPS is ₹1,000 while the maximum an employer can contribute is ₹1,250.
- Note that EPS is only applicable for employees whose salary + dearness allowance is under ₹15,000.
Transferring EPS Funds When Switching Jobs
You can transfer your EPS account funds to your bank account only when switching jobs. For this purpose, you will need Form 10C. If you have done 180 days of continuous employment but have not completed 10 years of service yet, this form will allow you to continue enjoying the EPS benefits.
Note that transferring your EPS funds is optional unless your total service period exceeds 180 days but is less than 10 years.
There are two ways you can transfer your existing EPS account funds:
- The online EPS transfer process (via EPFO portal).
- The offline EPS transfer process (by submitting Form 10C at an EPFO office).
In addition, you will need the following documents:
- A blank cheque.
- The death certificate (in original) in case the member is no more.
- A succession certificate (with a ₹1 stamp), in case the member’s legal heirs are applying for EPS benefits through a bank.
Now, let’s look at each process in detail.
Steps for Online EPS Transfer
Here are the steps to follow for an online EPS transfer process:
Step 1. Visit the EPFO website.
Step 2. Enter your Universal Account Number (UAN) and password.
Step 3. Click on the ‘Online Services’ and select ‘Claim (Form 31, 19, and 10C)'.
Step 4. Check if your employment KYC details and any other type of member information are accurate.
Step 5. Enter the last four digits of your registered bank account number to verify.
Step 6. Agree to the 'Certificate of Undertaking' terms and conditions.
Step 7. Under the 'I Want to Apply For' section, select the 'Just Pension Withdrawal (Form 10C)' option.
Step 8. Enter your full address and select the option to ‘Get Aadhaar OTP’.
Step 9. Enter the OTP that you will receive and click on ‘Validate OTP and Submit Claim Form'.
Now, the EPFO will verify and approve your claim. Once done, you will receive the EPS funds in your bank account.
When switching jobs, your EPF account also needs attention. You can use the EPFO website and/or the UMANG app to check EPF status and balance online. If you have raised a claim, you can check the EPFO claim status online as well. The online process usually ensures a quick, stress-free experience.
If you prefer the traditional mode of doing things, you can opt for the offline method of transferring EPS funds too.
Offline EPS Transfer
The offline EPS transfer process includes these steps:
1. Download Form 10C from the EPFO portal.
2. Fill out the form as required.
3. Submit it to the nearest EPFO office.
Document Attestation Process
When you carry out an EPS transfer, you must ensure to attest the Form 10C from the right authority. This will depend on how you are submitting your application:
1. If you are submitting a physical form at the EPFO office, you must get it certified by your previous employer.
2. If you have opted for the online process, the Form 10C must be attested by you as well as your employer.
In case the previous employer is unavailable, you can reach out to the following officials for attestation:
- A magistrate
- A gazetted officer
- The postmaster or sub-postmaster
- Head of an educational institution (should be a recognised institute)
- A Member of the Legislative Assembly (MLA) or Parliament (MP)
- The president of the village union
- The president of the village panchayat (in case a Union Board does not exist)
- The bank manager where you have a savings account
- A chairman, secretary, or member of the municipal or district local board
- A member of the Employees' Provident Fund’s Regional Committee or Central Board of Trustees.
Importance of the EPS Scheme Certificate
By now, you will know that you do not need to necessarily transfer an existing EPS account to a new employer.
However, the Scheme Certificate is an important document you must obtain during this process.
- The EPS Scheme certificate is a document that lists your job details. It showcases your job history and is considered valid proof of your service record.
- The EPS Scheme certificate also contains important details about the member’s family and the nominee/ beneficiaries.
- If you are switching jobs from an EPF-covered company to a non-EPF-covered company, make sure to take the EPS Scheme certificate. You can then use this certificate when joining a company covered under EPF.
- The Scheme certificate is also required to transfer your pension funds from one account to another. It is applicable after you have been employed for more than 9.5 years and are under 50 years old. At this stage, you must fill the Form 10C even when you do not want to transfer your EPS funds.
As the above information suggests, it is easy to access the EPS benefits when you are switching jobs. If you let the funds accumulate, you can have a solid corpus during your retirement. To make your retirement even more financially solid, consider opting for other pension savings plans as well.
Importance of Retirement Plans Along with EPS
While the EPS is a reliable scheme, there are many reasons to opt for other retirement plans, such as:
Increased Pension Benefits
Under EPS, you receive a pension based on your average salary and number of service years. This amount may not be enough in your senior years. It may not take care of the healthcare costs, inflation, living expenses, and so on. A solid retirement plan from a reputed financial company can help you bear such expenses with ease.
Better Returns and Flexibility
EPS provides a fixed pension amount. However, a private pension plan creates room for higher returns and flexibility. You can choose where you want to invest your funds based on your risk appetite. By choosing the right kind of funds, you can enjoy potentially higher returns.
Tax Benefits
The EPS funds in your account are taxable when you withdraw them. To enjoy tax benefits during your golden years, consider adding annuities or ULIPs (Unit-Linked Insurance Plans) to your retirement planning portfolio. These can play a crucial role in reducing your tax outgo.
Certainty for Your Loved Ones
The ideal retirement plan should also contain life insurance coverage. This ensures that even in the case of an unfortunate event, your loved ones’ future is certain. The support from a retirement plan-cum-life insurance policy will take care of your family’s financial needs even in your absence.
If the cost of retirement planning is bothering you, there are some ways around it. First, use a pension calculator. This will give you an estimate of the pension output based on how much and how long you are investing. Second, do adequate research. Ask around for cost-effective plans. Use the internet to check and compare quotes. Lastly, only opt for the coverage and pension amount you think is necessary for you.
EPS can provide a steady source of income during one’s retirement. If you wish to transfer EPS funds to your bank account when switching jobs, you can do so with a few easy steps. However, it is advisable to build a strong retirement corpus to have a healthy and happy retirement. Opting for other pension plans to complement EPS is the ideal route to a peaceful time in your senior years.
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