A

DISSERTATION REPORT

ON

EMPLOYEE’S PENSION

OF

TATA STEEL LIMITED

SUBMITTED BY

PRASAD SIMIRAN

UNIVERSITY ROLL 18101032

REGISTRATION NO.

UNDER THE GUIDENCE OF

SUBMITTED TO

PRAVIN TIWARI

VEER KUWAR SINGH, UNIVERSITY

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 DECLEARATION
I PRASAD SIMIRAN here by declared that project report entitled :
EMPLOYEE’S PENSION under the guidance of
Submitted in partial fulfillment of the requirement for the award of degree
MASTER OF BUSINESS ADMINISTRATION
by VEER KUWAR SINGH UNIVERSITY OF ARRAH is my original work

TATA STEEL , JAMSHEDPUR Page 3

 PENSION
A Pension is a fund into which a sum of money is added during an employee’s
employment year and from which payments are drawn to support the person's
retirement from work in the form of periodic payments. A pension may be a "defined
benefit plan" where a fixed sum is paid regularly to a person, or a "defined contribution
plan" under which a fixed sum is invested and then becomes available at retirement age.
Pensions should not be confused with severance pay the former is usually paid in
regular installments for life after retirement, while the latter is typically paid as a fixed
amount after involuntary termination of employment prior to retirement.
The terms "retirement plan" and "superannuation" tend to refer to a pension granted up-
on retirement of the individual. Retirement plans may be set up by employers, insurance
companies, the government or other institutions such as employer associations or trade
unions. Called retirement plans.

Pension System in India

Pre-Independence Pension System

The British started the pension system in India after the Indian struggle for
independence in 1857. This was the reflection of the pension scheme then prevailing in
Britain. But the provisions of this system discouraged the employees for creating a fi-
nancial cover for their post-retirement life. So, confronting to all these problems, the In-
dian Pension Act 1871 replaced the Pension System of 1857.

After that, temporary increases were done regularly in pension to compensate the in-
creasing prices, and the concept of dearness allowance came in the light to satisfy the
pensioners. But, like in most developing countries, there was no universal social secu-
rity system to protect the elderly against economic deprivation.

The Royal Commission on Civil Establishments, in 1881, first awarded pension benefits to
the government employees. The Government of India Acts of 1919 and 1935 made further
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provisions. These schemes were later consolidated and expanded to provide retirement
benefits to the entire working population of the public sector.

Post-Independence Pension System

Post-independence, several provident funds were set up to extend coverage to the

private sector workers.

Today, major retirement schemes in India include provident fund, gratuity, and pension
plans. The first two plans provide lump sum retirement benefit while the last one makes
payment in the form of a monthly annuity. The following general features characterize
these schemes i.e. they are mandatory, occupation based, earnings related, and have
embedded insurance cover against disability and death

Current Pension Products and Schemes

Provident Fund is a defined-contribution, fully funded benefit program providing lump

sum benefit at the time of retirement. The provident fund system, consisting of the
Employees’ Provident Fund (EPF) and a number of smaller provident funds is the
largest benefit program operating in India.

Provident fund is another name for pension fund Its purpose is to

provide employees with lump sum payments at the time of exit from their place of em-
ployment. This differs from pension funds, which have elements of both lump sum as well
as monthly pension payments. As far as differences between gratuity and provident
funds are concerned, although both types involve lump sum payments at the end of
employment.

In 1995, the government partially converted the EPF scheme and introduced the
Employees’ Pension Scheme (EPS). In addition to the provident fund, workers in both
public and private sectors receive the second tier of lump sum retirement benefit known
as ‘Gratuity.’ It is paid to the workers who fulfill certain eligibility conditions like a mini-
mum qualifying service period of five years.

Type of Pension
The following are the kinds of pension can be availed by the beneficiaries are listed out.

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Superannuation Pension – Superannuation pension can be claimed for the monthly
pension on retirement at the age of 58 years

Reduced Pension – Reduced pension can be claimed for the monthly pension at a
discounted rate of 4% per annum from the age of 50 years.

Disablement Pension – Disablement pension can be claimed Early monthly pension

amount due to permanent and total disablement

Widow and Children Pension – Widow and Children pension can be claimed for the
monthly pension for the wife and children after the death of the employee.

Orphan Pension –Orphan pension can be claimed for monthly pension benefits for the
surviving sons/daughters of the deceased employee up to their age of 25 years.

Nominee Pension – Nominee pension can be requested for the monthly pension for
the nominee represented after the death of the employee in case there are no family
members

Dependent Parent – Dependent Parent can be claimed for the monthly pension for de-
pendent parents in case the employee dies without a family (spouse and children) or a
nomine.

Who is eligible to claim Pension?

Any of the following members can claim the pension are specified below.

 Employee
 Window or Widower
 Major or Orphan
 Guardian
 Nominee
 Dependent Parent

EPF PENSION 1995

.

The EPF pension or EPS is a pension scheme for all the employees of organized
sector who otherwise don’t have any pension scheme. This pension scheme gives a
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guaranteed monthly pension after the retirement. The government department
employee provident fund organization manages the pension account of all the employee.
The EPF pension tries to give the social security to its employees and their families .
The families of employee also get the pension after the demise of the employee.

Pension amount of EPS pension is not linked to the contribution rather the service
period and last drawn salary decides the monthly pension. In technical term it is a
guaranteed benefits pension plan

In India every establishment which employees 24 or more person becomes the part of
employees provident fund. The government also contributes 1.16% in the pension
account. The maximum contribution by the government is Rs 180/month.

Contribution into EPF or EPS is mandatory for those workers whose basic pay plus
DA is less than or equal to Rs 15000. Those who earns more than this can opt out of EPF
and EPS .However once a person becomes employees provident fund member will
remain member till the employment.

HISTORY OF EPS PENSION

The present EPF Pension scheme. The employee pension scheme 1995 is applicable
from 16/11/1995. Before this date, there used to be the family pension scheme. The
contribution to family pension scheme was mere 3.34% because of this low contribu-
tion the pension amount was also low.

In the family pension scheme. Member did not get any pension in his lifetime. Only after
the death of the member the spouse get the pension.

From 16/11/1995 the employee pension scheme came into effect. The contribution to this
scheme increased to 8.33%. It gives better pension to the employee. In this scheme the
member gets the pension after the age of 58. IF member dies the spouse and children and
also get the pension.

ELIGIBILITY TO GET THE PENSION

 You must be thle member of employee provident fund scheme.
 You must have been in the service for atleast 10 years.
 One can get the pension after the age of 58 reduced pension can be withdrawn
after the age of 50.

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  You can also defer your pension till the age of 60. If you opt for deferment , the
pension would increase by 4% for every deferred year.
 The pension is given to a family after the untimely death of employee.
 An employee can get a pension if s/he gets totally incapacitated.

BENEFITS OF EPF PENSION

Unlike any other investment plan the EPF pension plan does not focus on returns. Ra-
ther, it is designed for social security. The social security of employee and its family is
the important for this plan Hence wife of a deceased employee gets pension throughout
her life, what if her husband has been in the server for a year

1. It is a guaranteed pension plan .You know the pension amount in advance. The
pension does not change after the retirement.
2. The pension plan is backed by the government hence there is no chance of default
you can rely upon it.
3. The contribution of this pension plan is not taken from you ,rather the employer
pays the contribution amount in your pension account.
4. The Government of India also contributes in the pension account the government
contribution is 1.16% of your basic pay.
5. After the demise of an employee the wife also gets reduced pension , even two
children can also get the pension till the age of 25, it is called as family pension.
There is no minimum limit of service for the family pension, if the member is not
married the nominee gets the pension till the death.
6. You can get the early pension after the age of 50, however the pension amount
would reduce..
7. On the death of pensioner, the pension is automatically payable to the spouse
(widow/widower).
8. On death or re-marriage of widow/widower,children will be given enhanced pen-
sion treating such children as orphan.
9. A child with the permanent disability get the pension till death.
10. Pension can be drawn from anywhere in India.

TERMS AND CONDITION OF EPS

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 You can’t get pension before the age of 50.
 Minimum 10 years service is require to get the pension.
 The government contribution can’t be more than 1.16% of 15000 . It means the
government will not contributes more than 174 in a pension.
 You can’t have more than one EPF pension account.
 The commutation of EPF pension is not possible ,before 2008 there was provision.

Contribution to employee pension scheme

 According to EPF rules , every employee contributes 12% of the basic pay+ DA to-
wards the EPF account. The eemployer also matches employee contribution
(not mandatory above Rs 1800), out of the employer’s contribution 8.33% (maximum
Rs 1250) goes for the employee pension scheme. Remaining 3.66% (can be higher) is
used for employee deposit linked insurance scheme and EPF.

EMPLOYEE EMPLOYER
CONTRIBUTION CONTRIBUTION
SCHEME NAME
Employee provident fund 12% 3.67
EMPLOYEE PENSION SCHEME 0 8.33%
EMPLOYEES DEPOSIT LINKED IN- 0 0.5%
SURANCE
EPF ADMINISTRATIVE CHARGES 0 1.1%
EDLIS ADMINISTRATION CGARGES 0 0.01%

FORMS RELATED TO EMPLOYEE PENSION SCHEME (EPS)

FORM 10C Member/Benefeciary Withdrawal Benefit or

Scheme certificate

Form 10C is filled and submitted when you want to claim benefit under the Employee
Pension Scheme (EPS). In simple terms, at the time of employment, the employee has a
pension fund which he keeps secured with the government for his retirement. If the em-
ployee has changed his/her job, the employee can carry forward the same account to his
new company. However, if the employee fails to find a job, the employee may apply for
withdrawal of funds. Thus, in order to avail the benefits and at the same time, retain the
membership with Employee Pension Fund (EPF) the employee files a Form 10C.

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When to Use Form 10C?
You can claim 10C to claim in the following:
 Withdrawal benefit
 Scheme certificate for member retention
 Employer share refund

About Scheme Certificate for Member Retention Benefit:

He/she can claim scheme certificate only when the overall service period has been more
than 9.5 years and if he/she hasn’t reached the age of 50 as on the application date.
Additionally, this scheme also allows you to carry forward the same when you rejoin in
same or different organization. And therefore, a member can withdraw their PF accumu-
lation through a scheme certificate.

About Withdrawal Benefit:

The Withdrawal Benefit certificate is issued to an employee who has been in service for
less than 9.5 years and hasn’t touched 50 years of age as of application date. This
scheme intends for pension money back as the employee isn’t qualified for pension.
Note: This benefit is not applicable in case the membership is less than 180 days
excluding the non-contributing period.

How to Fill Form 10C?

Form 10C is a 4 page document where the first two pages are required to fill in most of
the cases and third page in case you have taken an advances against the account. There
is no need to fill in the final page as it is used for administrative purpose.
The details on first page will consist of the following:
 Name
 Date of birth
 Father’s name and/or husband’s name
 Employer address
 PF account number
 Joining date with employer
 Reason for leaving and date of leaving

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  Full address
The details on second page will consist of the following:
 Date and signature, and some more details pertaining to age and account details
for remittances
 Particulars of family/nominees
 Mode of remittance
The third page consist of details like the following:
 Date and Signature
 Details of wages and period of non-contributory service of member
 Sum received

Who can apply / what is the eligibility to apply for Form

10c?
The members of Employee Pension Scheme who satisfy the below criteria can apply:
 In case you have left employment before completing 10 years and have attained the
age of 58 years before completing 10 years of service.
 An individual who has completed 10 years of service, but not attained 50 years of
age or a member who is between 50-58 years of age and is not willing to settle with
reduced pension.
 Nominee/family of the member who has died before 10 years of service whose age
was more than 58 years at the time of death.

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FORM 10 D Member To get the pension after 58 years of age

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 To get pension before 58 but after 50

years of age.

To get family the disability pension

Widow/widower, To get family pension

Children or nominee To get children/orphan pension

To get dependent or nominee pesion

The life certificate is given by the pension beneficiary

EPF Form 10 D
Any employee registered under the Employees Provident Fund Organization is automat-
ically enrolled for Employee’s Pension scheme. Under this scheme, all employees are
eligible to claim pension after retirement at the age of 58 years. However, an employee
can prefer for a reduced pension after 50 years at a discounted rate of 4% each year.
Form 10D has to be filled by the registered employee for withdrawal of monthly pension.
In this article, we look at the process of claiming a pension in detail.

Documents Required

The specified documents are to be enclosed with EPF Form 10D are as follows:

 Descriptive role of pensioner and his or her -signature/Thumb impression (in du-
plicate).
 Three copies passport size photographs.
 In the case of permanent and total disablement, the employee should undergo an
entire medical examination before the Medical Board designated by the EPFO. The
appropriate reports have to be duly attached along with the form.
 The establishment has to specify the certificate and wage particulars of the em-
ployee at the course of retirement or death.
 In case the establishment is shut down, and no authorised officer is designated, the
application has to be forwarded through anyone from the list of the magistrate,
gazetted officer, bank manager or any other sanctioned officer as may be
approved by the Commissioner.

ELIGIBILITY TO CLAIM PENSION

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 1. Those member, who are in service are eligible to fill up pension FORM 10D after
completion of 58 years of age.
2. In case of early separation (ESS/JFJ/REGISTRATION) can apply for reduced
pension (after completion of 50 years of age).
3. In case of deadth of member , widow/widower can claim pension immediately.
FORM 10D Widow/widower, To get family pension

Children or nomine To get children/orphan pension

To get dependent or nominee pesion

The life certificate is given by the pension beneficiary

Including children every year in November.

Non –remarriage certificate is given by widower

every year. And widow can given

once at the beginning of pension.

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Monthly pension calculation
PENSION CALCULATION I
The amount of monthly pension is decided on the basic of a simple formula. This formu-
la is for the service rendered after 16/11/1995

[AVERAGE SALARY x PENSION SERVICE]

70

 In this formula, the average salary is calculated from the last 12 months salary.
This salary is basic salary + D.A.
 While pensionable service is the year in service after 16/11/1995.

PENSION CALCULATION II
The members, who were earlier part of the family pension scheme joined employee
pension joined employee pension scheme from16/11/1995.because of this switch the pen-
sion calculation for their total service period can’t be uniform as earlier contri-
bution was very low ,therefore the pension amount for both the service period is calcu-
lated separately.

To calculate the pension for the period 16/11/1995 . A table is used you can read more
about this calculation as well as use the calculator in my pot on pension calculation.
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Premature pension withdrawal
To get the regular pension minimum 10 years service is mandatory, if you can’t complete
10 years in service you can withdraw the penion benefits. This pension withdrawal
benefits is not based on any interest, rather table is used to arrive at the amount.in this
date , the last wage is multiplied by a factor taken from the table. This factor is fixed on
the basic of service period.

If shyam earns basic pay of Rs 13000 at the time of leaving his 5 years old service ,the
withdrawal amount would be RS 68,640(13000X5.28). You can also use the pension
withdrawal calculator to reach the final amount.

YEARS OF SERVICE PROPORTION OF WAGES AT EXIT

1 1.02
2 2.05
3 3.10
4 4.18
5 5.28
6 6.40
7 7.54
8 8.70
9 9.88

PENSION SCHEME CERTIFICATE

Pension scheme certificate is given to the employee who does not compete minimum
service of 10 years. Instead of the pension benefits, one can also opt for pension scheme
certificate. Whenever a person again joins the service the pension scheme certificate is
used to add up the previous service. Due to this scheme ,the employee does not need to
complete the 10 years service period again for getting the penion.

Reduced pension before 58

One can also get the pension before the age of 58. But the pension amount would be
lesser than a regular pension. To get the reduced pensions, you must fulfill these
condition.

 You should not be in service and the date of leaving service may be at any
date/age and for any reson.

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  You should have attained the age of 50 years on the date opted for reduced pen-
sion.
 You must have been in the service for 10 years.
 You should give the option to draw reduced pension in form 10D.
 You can opt for reduced pension at any age between 50-57. It is not necessary to
claim immediately on leaving service.

The pension is reduced by 4% for every year. The reducing balance is used to get the
deducted amount. The below table gives you the factor to get the approximate amount of
reduced pension. To know the reduced pension, you have to multiply the full pension
with the given factor of respective .

Know your reduced pension

age Factor to multiply

50 0.7837
51 0.8080
52 0.8330
53 0.8587
54 0.8853
55 0.9127
56 0.9409
57 0.9700
58 1.0

Enhanced pension after 58

Recently, the EPFO has also given option to get the increased pension. You can get
higher monthly pension if defer it after the age of 58. The formula is similar to reduced
pension. In the reduced pension formula, the pension decreased by 4% for every year.
Similarly , you would get 4% more pension for every extra year , however you can get
only two such years as this benefits is not available after the age of 60.

Processing Time
The entire processing for settling the pension amount to the beneficiaries will be completed within thirty days from
the date of its receipt submitted by the pensioner. If the commissioner fails to settle the claim without any proper
reasons within thirty days, then the commissioner is liable for the delay, and the penalty will be imposed for such
delay from the commissioner.

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Application Procedure for Claiming Pension
To claim the pension amount using form 10D, follow the steps given below:

Visit EPFO Portal

Step 1: The applicant has to visit the official portal of Employee Provided Fund Organisation.

Download the form

Step 2: You can download the application (Form 10D) from the portal.

The Form 10D is reproduced below in the PDF format for quick reference.

Complete the details

Step 3: The application form (Form10D) has to be duly filled by the applicant and get it certified by the authorised
officer of the last establishment

Submit to EPFO office

Step 4: The employer then has to submit the form to the EPFO regional office

Attach the documents

Step 5: The required documents have to be enclosed at the time of furnishing the application form.

Verification of application
Step 6: The EPF officer validates the details and initiates the process of monthly pension disbursal in the account of
the beneficiary under the Employees Pension Scheme.

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