EPFO Offers 7 Types of Pension to PF Holders: Check Eligibility, Benefits, and Key Rules

Employees’ Provident Fund members are entitled to more than just retirement savings. The Employees’ Provident Fund Organisation (EPFO) provides seven different types of pension benefits under the Employees’ Pension Scheme (EPS), designed to support members and their families during retirement, disability, or in case of death. Each pension type comes with specific eligibility conditions and benefits. Understanding these options can help PF holders plan their financial future more effectively.

How EPFO Pension Contribution Works

For salaried employees, 12% of basic salary is deducted every month and deposited into the Provident Fund. Employers also contribute an equal amount. Out of the employer’s contribution, 8.33% goes into the Employees’ Pension Scheme (EPS), which funds pension benefits after retirement or under special circumstances. This EPS contribution is the foundation of all EPFO pension types.

1. Normal Superannuation Pension

This is the most common pension benefit under EPFO. Members become eligible after completing at least 10 years of service and attaining the age of 58 years. If a member chooses to delay pension withdrawal until the age of 60, they receive an additional 4% increase in pension for each year of delay, making it a beneficial option for long-term planners.

2. Early Pension

EPFO also allows members to opt for early pension after the age of 50 years, provided they have completed 10 years of service. However, there is a penalty involved. For every year the pension is taken before the age of 58, the pension amount is reduced by 4%. This option is useful in emergencies but should be chosen carefully due to the permanent reduction in benefits.

3. Disability Pension

In case a member becomes permanently disabled during service, the requirement of completing 10 years of service is waived. The member becomes eligible for pension immediately, provided they are unable to continue employment. This pension ensures financial security during unforeseen medical or physical challenges.

4. Widow (Family) Pension

If an EPFO member passes away, the spouse becomes eligible for widow pension. Along with the spouse, up to two children below the age of 25 years are also eligible for pension benefits. This ensures steady financial support for the family after the member’s death.

5. Orphan Pension

If both the EPFO member and their spouse pass away, the children are entitled to orphan pension until they reach the age of 25 years. This pension helps secure the future of dependent children during critical years of education and upbringing.

6. Nominee Pension

If the deceased member does not have a spouse or children, the nominated person mentioned in EPFO records becomes eligible for pension benefits. This provision ensures that the member’s contribution continues to provide financial assistance even in the absence of direct dependents.

7. Dependent Parents Pension

In cases where the member passes away without a spouse or children, dependent parents can receive pension benefits under EPS. This provision supports elderly parents who were financially dependent on the EPFO member.

EPFO Pension Calculation Formula

The pension amount under EPS is calculated using a fixed formula:

Monthly Pension = (Average Salary × Pensionable Service) ÷ 70

• Average Salary includes basic salary and dearness allowance.

• Maximum pensionable service is capped at 35 years.

This formula applies uniformly across pension categories, ensuring transparency and consistency in pension payouts.

Why EPFO Pension Matters

EPFO pensions are designed to provide long-term financial stability not only to employees after retirement but also to their families during difficult times. Knowing which pension category applies to you and meeting the eligibility conditions in advance can significantly improve retirement planning and financial security.