EPFO – Most of us who work in private jobs have a monthly PF (Provident Fund) deduction. We know that this money is being deposited for our future and that we will receive a pension upon retirement. A common rule is that if you have contributed to the EPFO for 10 years, you start receiving a pension from the age of 58. But did you know that the EPFO doesn’t just offer one type of pension; it runs seven different pension schemes?
This pension can provide significant support not only to you but also to your family during difficult times. Very few people are fully aware of its benefits. If you are also contributing to your PF, it is important for you to understand the various protections the EPFO provides to you and your family.
1. Retirement Pension
This is the most common pension most people are aware of. This pension is awarded by the EPFO when you turn 58. The amount depends on your total contributions to the pension fund. One good thing is that you can claim a pension after 58, up to 60 years old, if you wish. By doing so, the EPFO increases your pension by 4% each year. This is beneficial for those who want to continue working for a few years after retirement and receive a higher pension later.
2. Early Pension
Generally, the EPFO begins paying pensions at age 58, but there are some circumstances where you can receive pensions earlier. If you are eligible for a pension and wish to receive it before the age of 58, i.e., after the age of 50, you can claim it. The EPFO also provides for early pensions. However, one thing to keep in mind is that if you receive early pensions, your pension is reduced by 4% each year.
Understand with an example
If you are due a pension of ₹7,000 at age 58 and claim at age 57, you will receive ₹6,720, a 4% reduction. If you claim at age 56, you will receive ₹6,440, a 8% reduction.
3. Widow or Child Pension
This pension scheme is a major support for the family of an EPFO subscriber. If an EPFO subscriber dies, their wife and two children under the age of 25 are entitled to receive the pension. If there is a third child, they will receive the pension when the first child’s pension stops upon reaching the age of 25. The special feature of this pension is that the 10-year contribution rule does not apply in the event of the subscriber’s death. This means that if a subscriber has contributed for just one year and then dies, their widow and children will still be entitled to receive the pension.
4. Disability Pension
This pension is for EPFO members who become temporarily or permanently disabled due to an accident or illness during service. Age and 10 years of contributions to the pension fund are not required for this pension. If a subscriber has contributed to the EPS (Employees’ Pension Scheme) for even two years and becomes disabled, they are eligible for this pension. This pension helps them become financially independent.
5. Orphan Pension
This is for the tragic situation where the EPFO subscriber dies along with his or her spouse. In such cases, two of his or her children under the age of 25 are eligible for orphan pension. This pension is available to children until they reach the age of 25. This pension provides financial support during difficult times for children who have lost both their parents.
6. Nominee Pension
If an EPFO member dies without a spouse or children, their pension is paid to a nominee they have made. This nomination gives you the freedom to ensure that your chosen person receives financial assistance in your absence.
7. Dependent Parents Pension
This pension is for single EPFO subscribers who die without children or a spouse. In such a situation, their dependent father is considered eligible for the pension. If the father dies, the subscriber’s mother receives the pension. She continues to receive this pension for life. Form 10D is required to be filed for this pension. This pension provides a significant support to parents who are financially dependent on their children.