SUMMARY:
The Employee Pension Scheme (EPS) offers a pension after 10 years of service, determined by your average salary and years worked. Discover the guidelines for early withdrawal of pension contributions and the applicable conditions
EPF Contributions Explained
If you hold an active Employees’ Provident Fund (EPF) account, both you and your employer contribute a specific percentage of your salary toward this account. The EPF serves as a crucial financial tool to build a retirement corpus, ensuring financial security in your post-working years.
Upon retirement, employees can withdraw the entire accumulated sum. Premature withdrawals are also permitted, provided certain conditions are met. If you’re curious about how to withdraw pension contributions under EPF, this guide explains everything you need to know.
What Is the Employee Pension Scheme (EPS)?
The Employee Pension Scheme (EPS) was introduced in 1995 by the Employees’ Provident Fund Organization (EPFO) to provide pension benefits to employees working in the organized sector.
Under this scheme, both the employee and employer contribute 12% of the employee’s salary to the EPF account. From the employer’s contribution, 8.33% (up to a maximum of ₹15,000 per month) is allocated to the EPS, while the remainder goes to the EPF. Participation in EPF is mandatory for employees earning less than ₹15,000 per month.
When Can You Withdraw Your Pension Contribution?
According to the EPF Act, individuals retiring after completing their service can withdraw their pension by following the prescribed process. However, specific conditions apply:
1) Early Pension with Reduced Benefits:
- You can begin receiving a pension if you are at least 50 years old and have completed 10 years of service.
- The pension amount will be reduced by 4% for each year before you turn 58.
2) Withdrawal for Service Less than 10 Years:
- If you have served between 6 months and 10 years, you can withdraw your pension contributions after 2 months of unemployment.
3) Cases of Retirement Without 10 Years of Service:
- Individuals who retire at 58 but have not completed 10 years of service are not eligible for monthly pension payments.
- In such cases, they can withdraw the entire amount accumulated in the EPS account as a lump sum.
Documents Required for EPF Pension Withdrawal
To withdraw pension contributions, you will need the following documents:
- Address proof
- Bank account statement
- Two revenue stamps
- Identity proof
How Much Can You Withdraw from EPF?
There are specific rules regarding the amount you can withdraw from your EPF before retirement:
| Condition | EPF Withdrawal Limit |
| Wedding | Up to 50% of your total EPF contribution |
| Medical Emergency | Up to 6 times your current monthly salary or total corpus (whichever is lower) |
| Home Renovation | 12 times your current salary |
| Home Loan Repayment | Up to 90% of your EPF balance |
| Unemployment | 25% of the EPF balance after 2 months of unemployment, 75% after 1 month |
| Retirement | Entire accumulated balance |
How to Withdraw Pension Contributions
You can withdraw your EPS pension contributions through either online or offline methods.
Online Process:
- Log in to the Unified Member Sewa portal using your UAN and password.
- Under “Online Services,” select “Claim (Form-31, 19, 10C & 10D).”
- Verify your bank account number.
- Choose “Withdraw Pension Only” and fill out Form 10C.
- Submit the form by validating it with an Aadhaar-linked OTP.
Offline Process:
- Download the composite claim form (with or without Aadhaar) from the EPFO website.
- Provide bank details and link your Aadhaar to your primary account if using the Aadhaar-based form.
- Submit the completed form to your jurisdictional EPF office.
Conclusion
The EPF is a reliable tool for securing your financial future while also offering tax benefits on earned interest. By understanding the withdrawal rules and processes, you can make informed decisions about your pension contributions and their use.
