EPF Benefits Extended: Withdrawal Eligibility Now Includes Less Than 6 Months Of Service

Previously, withdrawal benefits were calculated based on the completed years of contributory service and the wages on which EPS contributions were made

The Labour Ministry revised the Employees’ Pension Scheme (EPS), 1995, ensuring that EPS members with less than six months of contributory service will now be eligible for withdrawal benefits on Friday. This change is anticipated to benefit over 700,000 EPS members who exit the scheme annually before completing six months of contributory service.

The labour ministry said in a statement, “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 benefits. This amendment will benefit more than 700,000 EPS members every year who leave the scheme with less than 6 months of contributory service.” 

Additionally, the government updated Table D within the scheme, which specifies withdrawal benefits based on years of service. This update ensures that each completed month of service is considered to provide members with proportionate withdrawal benefits.

“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 benefits 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 exit the scheme before completing the required ten years of contributory service for pension eligibility. These members receive withdrawal benefits according to the scheme's provisions.

Previously, withdrawal benefits were calculated based on the completed years of contributory service and the wages on which EPS contributions were made. As a result, members were eligible for withdrawal benefits only after completing six months or more of contributory service.

“Consequently, the members leaving scheme, before contributing for six 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 six months of contributory service,” the statement also said. 

In the fiscal year 2023-24, about 700,000 claims for withdrawal benefits were denied because the contributory service was less than six months.

Previously, the calculation under Table D did not account for fractional service periods less than six months after each completed year. This often led to lower withdrawal benefits in many cases. With the revised Table D, contributory service for calculating withdrawal benefits will now be considered in completed months. This adjustment aims to ensure equitable payment of withdrawal benefits.