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Employee Pension Scheme: Left job? Opt for withdrawal of pension money or scheme certificate using Form 10C

Sunil Dhawan
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What is the use of Form 10C in PF?: At the time of leaving a job, one may either get the employee provident fund (EPF) balance transferred to the new employer or withdraw the PF balance. But, PF is only one part of the employee’s retirement kitty, the other part is the Employees’ Pension Scheme (EPS) which is meant for pension during retirement years. Along with EPF, there are funds in the EPS which the employee can either withdraw or carry-over to the new employer. Carrying-over of EPS money is possible through something called ‘Scheme Certificate’.

Both, the options-Withdrawal of EPS money or opting for Scheme Certificate is available in Form 10C. "Before attaining the age of 50 a member may either withdraw or can process for scheme certificate and one can enjoy scheme certificate and then again become a regular member of EPS till attaining the age of 58," says Prashant Singh, Business Head – Compliance and Payroll Outsourcing, TeamLease Services.

One can use the Composite Claim Form ( Aadhaar/Non-Aadhaar) that EPFO currently uses for such cases. If you opt for Scheme Certificate, the EPFO will keep a record of it and will accordingly work out the number of years of service. Therefore, after leaving a job, if you wish to withdraw EPS money or opt for Scheme Certificate, make sure you have filled the Form 10C.

According to Singh, the following claims can be made using PF Form 10C:

  • A member who has left the employment before completion of 10 years' service can use Form 10C to apply to get the amount toward withdrawal benefit
  • A member who has left the employment before completion of 10 years' service who is not eligible to get Pension, has to apply in Form 10C to get the amount towards withdrawal benefit
  • A member, who has completed 10 years' service on the date of leaving the service and has not attained the age of 50 years on the date of filing this application can use the form to get scheme certificate
  • A member who has attained the age of 50 years or more, but less than 58 years and not willing for reduced pension can use the form to get Scheme Certificate but in case he wishes to get reduced pension, he/she can do so by applying through Form 10D
  • Finally, Form 10C can be used by family members in case of a deceased member who died after attaining 58 years age but before completion of 10 years of eligible service

As an employee, 12 per cent of basic salary goes into EPF while an equal contribution is made by the employer. However, not all of the employer’s contribution goes into EPF-only a portion goes while the other portion goes into EPS.

EPS Calculation

Every month, from the employer’s contribution 8.33 per cent of basic salary (up to Rs 15,000) goes into EPS and balance into EPF. So, irrespective of basic salary Rs 1,250 ( 15000 * 8.33%) goes into EPS. Simply put, in a year, Rs 15,000 (Rs 1250*12) goes into EPS and in 5 years employer’s contribution to EPS will total Rs 75,000.

EPS withdrawal before 10 years

After ten years of service, the option to withdraw EPS money stops. On changing job, one will have to go for Scheme Certificate compulsorily. But, if you haven't completed 10 years of service and wish to withdraw EPS money, you can do so by filling Form 10C.

EPS after 58 years of age

After completing 10 years of service and age 50, one may still get a pension but at a reduced rate. Once you retire after age 58, your regular and full pension for a lifetime will begin.

How much pension

The amount of EPS money that is allowed to be withdrawn before completing 10 years will be based on a certain factor as set by EPFO. For example after 5 years, one is eligible to get 5.02 times of the proportion of basic salary put into the scheme i.e. Rs 75,300 ( Rs 15,000*5.02)

EPS pension formula

On retirement after age 58, the pension amount will depend on the pension formula, which is

(Pensionable Salary multiplied by Service Period) / 70.

The salary for pension calculation is capped at Rs 15,000 and the maximum service period can be 35 years. The maximum pension can therefore be Rs 7,500 per month.

To Sum Up

Every time you leave a job, make sure you download the Form 10C and submit it to your employer after filling it. One can submit it online too. The EPS Form 10C instructions will give you the option to choose between withdrawing EPS money or opt for Scheme Certificate, depending on your service period till date.