Designed to help salaried individuals build a pension fund, the Employee Provident Fund (EPF) and the Employee Pension Scheme (EPS) have some similarities, as well as some differences. This guide will help you understand both.
What is EPF?
EPF is a pension fund scheme under which a salaried employee and his employer equally contribute 12% of the employee’s basic salary to this fund, making it an aggregate of 24%. On this account, the central government offers a specific rate of interest.
Provided certain conditions are met, an employee can withdraw part of this pension before retirement. However, the entire amount can only be withdrawn post-retirement.
All EPF members have a UAN, which acts as their umbrella identity to track all their EPF-related information.
See also: All about UAN login
What is EPS?
Of the 12% of the employer’s contribution in the EPF account, 8.33% goes towards EPS. The employee does not contribute to EPS. The upper limit of contribution in EPS is capped at Rs 1,250. Pension from the EPS fund is received after a member attains the age of 58.
EPF and EPS: Similarities
- Both are framed under the Employee’s Provident Fund & Miscellaneous Provisions Act, 1952.
- Both are administered by the central board of trustees.
See also: All about EPF scheme
EPF vs EPS
| Basic workings | EPF | EPS |
| Applicability | All companies with more than 20 employees | All EPFO members, whose basic salary is up to Rs 15,000 |
| Employee contribution | 12% | None |
| Employer contribution | 3.67% | 8.33% |
| Interest rate | 8.1%* | None |
| Deposit limit | 12% of the salary | 8.33% of salary or Rs 1,250, whichever is lower |
| Age limit for withdrawal | 58 years or two months of being unemployed | 58 years |
| Withdrawal | After 58 years of age within 60 days of unemployment | After 58 years of age |
| Premature withdrawal | Allowed in specific circumstances | Allowed after 50 years of age |
| Tax | Interest is fully exempted if the contribution is not more than Rs 2.5 lakh in a year | Pension and lump sum both are taxable |
| Tax deduction | Deduction of up to Rs 1.50 lakh in a year is allowed under Section 80C | No deduction allowed |
*As of June 30, 2022
FAQs
Are EPS and EPF the same?
No, they are different.
Which is better, EPS or EPF?
Both schemes are effective as instruments of retirement planning.
Can I have both EPF and EPS?
Yes, you can have both EPF and EPS.
