How EPFO pays out pension to family members of the deceased

Spouse and children are the primary beneficiaries of family pension under Employees' Pension Scheme (EPS)

Every month, your employer deducts 12 percent of your basic salary (plus dearness allowance, if any) and deposits it in your Employees’ Provident Fund (EPF) account along with an equal amount as its contribution. The corpus created through such regular contributions is handed over to you as a lump-sum at the time of retirement.

Out of the employers’ contribution of 12 percent of basic salary, 8.33 percent flows into the employees’ pension scheme (EPS), which serves as a pool from which you receive regular income through your lifetime.

However, the basic salary for the purpose of this calculation, though, is capped at Rs 15,000 (which means Rs 1,250 flows into your EPS), unless you have opted for higher pension on actual basic salary last year. You are entitled to pension once you complete at least 10 years as an EPS member. At retirement, you will start receiving pension as per the declared formula [Pension= (pensionable salary (that is, average of last 60 months) x pensionable service)/70)].

Pension for family members 

Under the Employees’ Pension Scheme, 1995, not only the member employee but family members—primarily spouse and children—too are entitled to pension in the case of the member’s death before or after retirement.

From the pensioner’s retirement until death, s/he receives the pension as per the formula. In case of her/his death, the pension payments will not cease completely. The spouse and children, if they are under 25 years of age, will be eligible to receive the pension.

The family will receive the pension even if the EPS member has made one contribution to the pension fund before death. If the employee dies while still employed, the minimum guaranteed pension paid to the spouse will be Rs 1,000 per month.

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Check your eligibility

As per EPS 95 definition of family, spouse and children (under the age of 25 years) are entitled to the pension. This definition also covers children legally adopted by EPS members. The widow pension handed out to the deceased pensioner’s spouse will be paid out for lifetime or until s/he remarries. If s/he were to remarry, children’s pension will be converted into orphan pension, which will be higher.

In cases where the employee was single, the widow pension will be paid out to dependent parents—dependent father, followed by dependent mother. As a member or pensioner, you cannot nominate anyone in particular. The payouts will happen only as per the EPS rules, which means that spouse and children will automatically be the beneficiaries, unless the EPS member is unmarried or divorced.

Once married, however, any nomination in favour of others will be treated as invalid, with spouse and children becoming the default beneficiaries. The spouse will get up to 50 percent of the pension that the member was eligible for. Children will receive 25 percent of this widow pension.

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Children’s share in family pension

The monthly children’s pension will be 25 percent of the amount paid as widow/widower pension. This amount will be paid only until the child turns 25. Marital status of children will not be taken into account – the only condition is that they should not be older than 25 years.

Also, only up to two children at a time will be eligible for this pension. If the EPS member’s child happens to be permanently and totally disabled, s/he will get the amount for life, irrespective of the number of children in the family.

If both parents are no more, the amount—termed ‘orphan’ pension— will go up to 75 percent of the widow pension. A separate bank account needs to be opened to receive children’s pension. Such children will receive double pension if both parents were members of EPS.

They will need the pensioner’s death certificate, beneficiaries’ Aadhaar copies and bank account details, as also documentary proof of age for the children.