The Employees’ Provident Fund, popularly referred to as the EPF, has two components. One, a lump sum that is paid at the time of retirement of the employee and two, a monthly pension that becomes payable at the earliest age of 50 years and latest by 60.
The pension is calculated according to a certain formula and is paid to the family members (wife, children, parents). However, there are a few steps that have to be done before that. The pension is paid from the corpus that is accumulated in the EPS (Employee Pension Scheme) which is also maintained by the EPFO.
What happens to EPS contribution after death?
Whenever we say “family members” it becomes important to define “family”. According to the rules laid down in the EPS 95, the spouse of the EPF contributor and children who are below the age of 25 can legally get pension from EPS. Another important point is that the pension paid to a widow will be paid only till such time she remains a widow. If the widow remarries, the pension will be stopped. If she doesn’t remarry the pension will be paid throughout her life. However, consider a situation where the spouse remarries but the child/children are under 25. In that case, the children will get orphan pension, (which is supposed to be higher).
When will parents get pension
Now consider a situation where the employee – the EPF contributor – was single. If this person expires and one or both of his/her parents are alive, then the pension will be paid to the parents who would be considered “dependent”. First, the dependent father gets the pension and when the father is no more, the dependent mother will receive it.
Extent of EPS payout to family members
If the EPF member dies, the spouse will be paid 50% of the pension compared to the member. On the other hand, children will get 25% of the widow pension. However, the EPS pension will be paid to 2 children at the most and the marital status of children will not matter when the pension is paid.
The monthly pension paid by EPF or Employees’ Provident Fund is an extremely important financial security that EPFO provides for the family members/dependents of the deceased contributor. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
