A new facility has been introduced in the Employer’s Login under Member >>> Deferred Pension to allow the updating of the “Deferred Pension Flag”.
Action Required:
- This is not a mandatory option and purely individual employee’s decision to opt for deferred pension contribution.
- Employer must utilize this new facility to explicitly flag employees who have crossed the age of 58 years but are still contributing to the Employees’ Pension Scheme.
- The primary purpose is to ensure the continuity of the employee’s Pension Fund contribution and to allow them to avail the benefit of a deferred pension.
- Compliance Impact: Failure to flag these members correctly in the system may lead to:
- The system automatically restricting the EPS contribution (8.33% of the employer’s share) after the employee turns 58, as per the revamped Electronic Challan-cum-Return (ECR) system.
- The employer’s contribution (8.33%) being diverted to the employee’s EPF account instead of the EPS account. This could result in a lower final pension amount for the employee and potential compliance issues for the employer.
Employee Benefits of Deferred Pension
| Benefit | Detail |
| Increased Pension Amount | An eligible employee who defers drawing their pension beyond 58 years of age will receive an increase in their monthly pension amount. |
| Increase Rate | The pension is increased by 4% for every completed year the pension withdrawal is deferred, up to a maximum age of 60 years (i.e., a maximum increase of approximately 8.16% for two full years of deferment). |
| Continued Contribution | The employee’s pensionable service and salary up to the age of 60 (or date of exit, whichever is earlier) are considered for the final pension calculation, resulting in a higher Pensionable Service and Pensionable Salary, thus increasing the final monthly pension payout. |
| Continued EPS Membership | The Deferred Pension Flag allows the employee to continue as an EPS member and permits the employer to continue EPS contributions (8.33%) for the period of deferment (up to age 60). |
In simple terms, by continuing to work and contribute with the Deferred Pension Flag updated, the employee’s final monthly pension will be higher.
Eligibility Condition for Employee
- The employee must be an existing EPS member.
- The employee must have completed a minimum of 10 years of eligible service under the EPS on attaining the age of 58.
- The employee must continue in employment after attaining 58 years of age.
- Deferment is allowed only up to 60 years of age (a maximum of 2 years).
Deferred Pension – Employer Process (Updated Requirement)
For employees who wish to continue EPS contributions after the age of 58, employers must follow the steps below:
- Do not enter an EPS exit date at 58 if the employee continues in service and EPS contribution continues.
- Log in to EPFO Employer Portal → Member → Deferred Pension.
- Select the employee and activate the Deferred Pension Flag.
- Continue statutory remittances:
- EPF contributions as per applicability
- Employer EPS contribution (8.33%) until the actual exit date
- Upon the employee’s eventual exit:
- Enter the EPS Exit Date corresponding to the actual date of cessation of service
- Ensure final wage month and contributions are aligned
The employee may then proceed to apply for a claim.