A member of the Employee Pension Scheme (EPS) becomes eligible for lifelong pension once he or she completes 10 years of active contribution under the EPS. However, the pension typically starts when the member reaches the age of 58 or the retirement age applicable in the organisation concerned. However, what happens in case the member dies before retirement? Will the spouse get a lump sum amount, or will the spouse have to wait till the deceased pensioner’s retirement year to get the pension?
When EPS member dies before reaching 58 years of age
Even when a member is eligible for pension after completing 10 years of service, the pension starts only after retirement. This is typically the age of 58 if the member is alive. As EPF and EPS contributions go together, if an employed member dies before the retirement age and has a balance in the EPF account, the spouse will get the entire balance in the provident fund account — as a lump sum payment. “As regards the provident fund, the spouse would be eligible for withdrawal of the entire PF accumulations (contributions plus accumulated interest) upon the death of the member,” says Tapati Ghose, Partner, Deloitte India.No lump-sum payment for EPS contribution
Can such a spouse get a lump-sum amount even in the case of pension? There is no provision for the spouse to get a lump-sum amount in lieu of the pension in case of the death of the EPS member. “The spouse will get a monthly widow pension in case the pensioner dies after having rendered 10 years of eligible service even if they had not yet attained the age of 58 years,” says Vaibhav Bhardwaj, Partner, INDUSLAW.
Ghose says if the deceased member has put in 10 years of service, the spouse would be entitled to a monthly widow pension (as determined by the formula or as per Table C of the EPS whichever is higher).
Will the spouse need to wait till the deceased EPS member’s retirement age?
The next question that arises is when will the spouse start receiving pension, and whether he or she needs to wait till the retirement age of the deceased EPS member. “There would be no requirement to wait till the deceased pensioner’s retirement year to get the pension. The spouse’s eligibility for the pension would start from the date of the pensioner’s death,” says Bhardwaj.
How much pension will the spouse get?
As far as the pension amount is concerned, the rules vary between pre-retirement and post-retirement phases of the member. If the member has retired, the pension amount will be half. “In case an EPS member who has completed 10 years of service dies after reaching 58 years, the spouse would be entitled to a pension equal to 50% of the pension payable to the member on the date of his death,” says Akhil Chandna, Partner, Grant Thornton Bharat.
However, if the member dies before the retirement age, the spouse is eligible to get the full pension amount. “In case an EPS member who has completed 10 years of service dies before reaching 58 years, his or her spouse would be entitled to a pension equal to the member’s pension that would have been admissible if the member had retired on the date of death,” says Chandna.
The higher the gap between the age at death and retirement, the lower will be the pension amount. Even though the this amount would be less than what member would have got at the time of retirement, the surviving spouse will get the pension immediately. “Typically, the widow’s pension would be less since it would be equivalent to the amount of pension the deceased pensioner would have received had they retired on the date of their death as opposed to the date on which they would have attained 58 years,” says Bhardwaj.
The pension amount will depend on many factors. “Whether the widower’s pension would be less or more than the expected pension at the age of retirement would be dependent on a number of factors, including the pensionable salary,” says Bhardwaj. However, there is a minimum pension amount that the surviving spouse will get. “The minimum amount of widow pension per month is Rs 1,000,” adds Ghose.