What Is the Role of Kendriya Sainik Board?

The Employees' Provident Fund (EPF) is a retirement savings scheme available to employees working in the public and private sectors in India. However, military personnel in the Indian Armed Forces do not contribute to the EPF system. Instead, they are covered under a separate pension fund and retirement benefits scheme, which provides them with a distinct set of pension and retirement benefits tailored for military service. These benefits ensure that the unique nature of military service, which often involves early retirement and different service conditions, is adequately addressed.

Coverage of Military Personnel – EPF vs. Separate Pension Fund

1. Employees' Provident Fund (EPF):

EPF is a retirement savings scheme where both the employee and employer contribute a percentage of the employee’s salary to the fund, which is then accumulated and paid out at the time of retirement.

Eligibility for EPF typically applies to employees of private sector organizations and certain government departments. However, military personnel are not covered under the EPF system as they are not considered employees under the same labor laws.

2. Military Pension System:

Military personnel are not part of the EPF system but instead are covered under the Defence Pension Scheme, which is distinct from civilian pension schemes.

This scheme provides for a pension after retirement, with the amount based on the rank held, length of service, and pay scale at the time of retirement.

The pension for military personnel is often designed to reflect the unique nature of military service, including the possibility of early retirement, medical care, and disability benefits.

3. Types of Pension Schemes for Military Personnel:

Regular Pension:

Available for personnel who have served for a minimum period of 15 years and are retiring at the end of their service.

Disability Pension:

If a service member is invalided out due to a disability during service, they are eligible for a disability pension.

Family Pension:

In the event of the death of a military member, their dependents (spouse and children) may be entitled to a family pension.

Gratuity:

In addition to the pension, military personnel may receive gratuity as a lump sum amount based on the length of service.

4. Retirement Benefits for Military Personnel:

Upon retirement, military personnel receive retirement benefits that can include:

• Pension (based on rank and length of service),
• Gratuity (a lump sum),
• Leave encashment (for accumulated leave),
• Health care benefits under the ECHS (Ex-Servicemen Contributory Health Scheme).

5. Pension Calculation:

The pension calculation for military personnel is based on their last drawn pay and length of service.

Pay Commission recommendations, such as the 7th Pay Commission, influence the pension amounts by setting the revised pay scales.

Unlike the EPF, where the retirement corpus is built up from employee and employer contributions, the military pension system is based on the government’s commitment to support its retired personnel.

Comparison: EPF vs. Military Pension System

Example:

Example 1:

A soldier with 20 years of service is retiring with a basic pay of ₹50,000. Instead of being covered under the EPF, the soldier will be eligible for a pension based on the rank held and length of service, which will be a monthly payment as per the Defence Pension Rules.

Example 2:

A military officer who retires after 30 years of service and has accumulated substantial leave may receive a pension based on their last pay drawn along with a gratuity and other retirement benefits under the Defence Pension Scheme. The officer will not be entitled to an EPF lump sum but will benefit from the pension throughout their life.

Conclusion:

Military personnel in India are not covered under the Employees' Provident Fund (EPF) system, as they are not classified as employees under the same laws that govern civilian employment. Instead, they are part of a separate, government-funded pension system designed to cater to the unique aspects of military service. This pension system provides a regular pension post-retirement, along with gratuity, leave encashment, and medical benefits, ensuring that military personnel are financially supported after their service ends. While EPF is based on a defined contribution model, the military pension follows a defined benefit structure, ensuring stable financial security for retired personnel.