Don't forget to take this EPS pension certificate after leaving your current job While leaving the job, an employee should also get the this pension certificate for their records. Read on to know what this pension certificate is, why you should get it and how to get it
Many employees switch jobs for better salaries. While doing so, those who are part of the Employees' Provident Fund (EPF) Scheme and the Employees' Pension Scheme (EPS) should also remember to transfer their EPF accounts from the old to the new employer. However, not many employees are aware that they should also obtain an EPS certificate from the Employees' Provident Fund Organisation (EPFO).Mallika Noorani, Senior Partner, Parinam Law Associates, says, "EPS scheme certificates are issued as mandated under the Employees' Pension Scheme, 1995. These certificates are issued when an EPF member ceases to be a part of the EPF Scheme. This can happen when an employee switches jobs, or completely exits from EPF by withdrawing money from the EPF account before retirement age."
According to the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, an employee can withdraw all the money from her EPF account even before reaching the retirement age and close the account if she has not been in employment for more than two months. However, in the case of the EPS or pension scheme, the individual will get a lump sum payment only if the service or employment period is less than 10 years. An EPF member who has not completed 10 years of service can get the pension certificate if she does not wish to avail the lump sum withdrawal benefit.
If an employee has completed more than 10 years of contributions to the EPF (and so not eligible for lump sum payment), then the EPS pension certificate is issued at the time of exiting the EPF Scheme.
Also Read: Step-by step guide to withdraw money from EPF account online
Puneet Gupta, Tax Partner, People Advisory Services, EY India, says, "The EPS scheme certificate issued by EPFO mentions details such as pensionable service years (i.e., the number of years of service rendered while being covered under the EPS), pensionable salary amount and details of family members/nominee eligible to receive pension in case of death of EPF member. This certificate will help you or your nominee claim the pension. Do note that this certificate works as a stop-gap arrangement. If an individual joins a job at a later date, then this certificate can be used to calculate service year at the time of pension disbursal. Pension under the EPS scheme starts at the age of 58 years. However, an individual can opt for an early pension, from 50 years, if they have left their job."
Is it mandatory to obtain an EPS scheme certificate?
"The EPF Act mandates that an employee must obtain an EPS certificate at the time of leaving a job or at the time of exiting the EPF Scheme. However, in the real world, it is not followed strictly. It is advisable that employees collect their EPS scheme certificate to ensure that they have records of their pensionable service period," says Noorani.
There is lack of clarity on whether the EPS scheme certificate is mandatory while switching jobs and when the employee continues to be a member of the EPF, says Gupta from EY India. "However, practically, if the EPF accounts with both the employers (old and new) are under the same UAN on the EPFO portal, the combined service details may be automatically captured in the EPFO online records. However, if the new employer is not covered under the EPF Act, then it is better to have a pension scheme certificate for your record."
Here is an example to understand why an EPF member must have a pension scheme certificate handy:
Suppose an individual has worked for 5 years with organisation A, 8 months with organisation B, 11 months with organisation C and 6 years with organisation D. The total pensionable service period becomes 12 years and 7 months. For the purpose of EPS pension calculation, the pensionable service becomes 13 years because the law mandates that the service year be rounded off. Six months or more is treated as one year and less than 6 months is ignored while doing the calculation.
Now suppose the EPFO has no records of this individual for the 11 months with organisation C, the pensionable service period of 11 years and 8 months is rounded off to 12 years. The pension amount will be lower because of this reduction in service years . This wouldn't have been the case had the individual got the certificate and ensured that same records were updated with the EPFO.
Another example is when an employee switches jobs and the new employer is not covered under the EPF Scheme. In such a scenario, having a pension scheme certificate related to the old EPF account can come in handy. The document acts as evidence of your pension claim.
"In the example above, if the employee is subsequently employed in an establishment covered under the EPF Scheme, her earlier service as per the scheme certificate will be required for computing pension on reaching the retirement age, along with the fresh spell of pensionable service," adds Noorani.
Process of obtaining EPS scheme certificate (Form 10C) online
The process of obtaining an EPS scheme certificate is fairly easy and can be done online. An EPF member can visit the Member Sewa portal to apply for an EPS scheme certificate.
Step 1: Log in to the portal using the UAN (universal account number) and password.
Step 2: Click on "online service" in the menu tab. Select "claim (Form- 31, 19 and 10C)".
Step 3: Enter the full bank account number registered in the EPFO record and click on "verify". Next, you will be required to click on "certificate or undertaking" and click on "yes".
Step 4: Select the "I want to apply for" section and click on "only pension withdrawal (Form 10C)".
Step 5: Enter your address registered in the EPFO record, click on the disclaimer and then select "get Aadhaar OTP". You will receive OTP on the registered mobile number.
Step 6: Enter the OTP and click on "validate OTP and submit form".
Noorani says the Form 10C downloaded from the portal needs to be attested both by the employee and the employer whose service the individual is leaving.
"Once the form is attested, you are required to submit the scanned copy online or make a physical submission at the regional EPFO office. Once the attested form is submitted, the EPFO will issue the EPS pension scheme certificate." She says there is no time limit to apply for Form 10C. "However, it is recommended to obtain it at the earliest," she adds.
This story originally appeared on: India Times - Author:Faqs of Insurances
