Most of the working people consider the PF deducted under the Employees Provident Fund Organization (EPFO) only as a support for old age. The common belief is that one can avail the benefits of Employee Pension Scheme (EPS-1995) only after the age of 58 years. But this is not the whole truth. In fact, EPS is not just a retirement fund, but it is a very strong social security cycle. If any untoward incident happens to an employee during employment, such as untimely death or permanent disability, then this scheme becomes a big financial support for his entire family. As an employee, you should know how your PF account becomes a shield for your family in difficult times.
Option to take premature pension
As per the rules, if an employee has contributed to the EPS for 10 consecutive years, he becomes legally entitled to receive a monthly pension on completion of 58 years of age. However, keeping in mind the emergency situation, the facility of ‘Early Pension’ i.e. premature withdrawal of pension has been given even after the age of 50 years. But there is a technical catch here. If you withdraw this amount before the stipulated age, then due to premature withdrawal, the total amount of pension is deducted by some percentage every year.
Rules on becoming disabled during employment
Accidents in life never come without warning. If an employee becomes permanently disabled due to an accident or illness while on the job, then the rules of EPS change completely. In such a sad situation, there is a provision for disability pension. The biggest relief is that the condition of 10 years of service with normal retirement does not apply in this. Its direct objective is to provide immediate financial security to an employee who has lost his earning power due to physical disability.
Financial security of the family after death
The real strength of the EPS 1995 scheme is its ‘Family Pension’ model. It is not limited to just the survival of the employee. Unfortunately, if the employee passes away, under the scheme his eligible family members are given the benefit of monthly pension. Its scope includes pension for the spouse (widow or widower), child pension for the upbringing of children and also financial assistance for orphan children in certain special circumstances. This is why financial experts advise against considering it as just an ordinary savings account.
Impact of paperwork errors including misunderstanding by nominee
A big misconception regarding PF account is that the person who is made a nominee, all the money will go directly into his account. The primary right to receive pension in EPS is only to the eligible members of the family as decided by the rules of the scheme. If an unmarried employee makes an outsider a nominee, then mere registration of name does not entitle him to the legal right to pension.
Apart from this, even a small spelling mistake in your name, date of birth, Aadhar card information, bank account or service record can hamper the pension claim. While changing jobs, not transferring the old PF properly or filling wrong information in Form-11 has heavy consequences in future.
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