EPF vs EPS - Difference Between EPF and EPS

When preparing for retirement, two important schemes in India are the Employees’ Provident Fund (EPF) and the Employees’ Pension Scheme (EPS). Although both fall under the umbrella of the Employees’ Provident Fund Organisation (EPFO) and are governed by the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952, they serve distinct purposes.

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What is EPF

The Employees’ Provident Fund (EPF) is a savings scheme meant to help salaried employees build a retirement fund.

Under EPF:

• Employee and employer both contribute each month (typically 12 % of the employee’s basic salary + dearness allowance).
• You earn interest on the accumulated amount.
• When you retire (or under certain conditions resign/unemploy), you can withdraw the lump sum (your contributions + interest).
• It is meant for long-term savings rather than an immediate income stream.

What is EPS

The Employees’ Pension Scheme (EPS) is a pension plan component, operating alongside EPF.

Key features:

• Only employer contributes to EPS (employee contribution is nil) - part of the employer’s share under EPF goes into EPS.
• There is a ceiling on salary eligible for EPS calculation (basic + DA up to ₹15,000 per month) for the contribution portion.
• After completing the required years of service (typically 10 years) and reaching the required age (say 58 years), you become eligible for monthly pension under EPS.
• The scheme is about regular income post retirement, not just a lump sum.

EPF vs EPS – Detailed Comparison

Feature

EPF

EPS

Who contributes

Employee + Employer (12% of basic+DA)

Only employer’s share (8.33% of basic+DA)

Employee contribution

Yes (12%)

None

Employer contribution split

Out of employer’s 12%: 3.67% goes to EPF; rest to EPS/others

8.33% goes to EPS, salary capped at certain limit

Purpose

Build accumulated savings (lump sum)

Provide pension (monthly income) after retirement

Withdrawal / benefit type

Lump sum withdrawal possible (after certain conditions)

Monthly pension after meeting criteria; lump sum only in specified cases

Interest

Yes,  interest is paid on EPF balance annually.

No separate interest pension amount calculated by formula

Salary cap for contribution calculation

Generally up to ₹15,000 basic+DA used for EPS part; EPF can apply beyond that for voluntary etc.

Salary cap ₹15,000 (for EPS contribution)

Exit / eligibility

Can withdraw after retirement/unemployment for 2 months etc.

Pension becomes payable after 10 years of service & age 58; alternate rules apply for earlier exit

Tax treatment

Withdrawals and contributions under conditions often tax-free.

Pension payments are taxable as per your slab; withdrawal rules differently taxed.

Why Both Schemes Exist and How They Work Together

Together, EPF and EPS form part of your retirementbenefit in a structured way:

• EPF gives you a corpus at retirement-time (so you have a chunk of money to use).
• EPS gives you income after retirement (monthly pension to help meet your ongoing expenses).
  Thus, while EPF is about savings, EPS is about pension, both complement each other.

What It Means for You as an Employee

• If your salary (basic + DA) is within the defined limits and you are in an organization covered by EPFO, you will have both EPF and EPS components.
• When you see your payslip deductions: your contribution to EPF is visible; you might not see EPS contribution separately (as it comes from employer side).
• Over your career, your EPF balance will show up in your passbook/portal; your EPS benefit will be calculated at retirement based on service & salary.
• You should track both: EPF for how much your corpus is, EPS for what pension you might expect.
• If you change jobs, ensure your UAN is active and your EPF/EPS records are transferred so you don’t lose benefits.

Things to Check / Good to Know

• Know how much portion of your employer’s 12% share goes into EPF vs EPS.
• Check your salary basic + DA capture the correct amount (especially if your salary is above ₹15,000 or allowances confuse calculations).
• When planning retirement or job-exit, know the conditions for EPS pension eligibility (10 years of service etc.).
• For EPF, you may be able to withdraw under certain conditions (house, education, etc) but EPS pension is different.
• Retire-planning: For lump sum needs perhaps focus on EPF; for recurring income your expectations of EPS should be realistic.
• Tax & withdrawal rules differ, ensure you know them.

Summary

In simple terms:

• EPF is your savings pot built during working years (you + employer contribute, interest is earned).
• EPS is your pension scheme built by your employer’s contribution, designed to give you regular income after retirement.

Both are important for retirement planning but serve different roles. Understanding both helps you plan better.