EPF vs EPS

As an employee, you are eligible for both the Employee Provident Fund (EPF) and the Employee Pension Scheme (EPS) in India. Read ahead to know their features and the differences between them.

Difference Between EPF vs EPS at a Glance

The major difference between the EPS and the EPF is that both the employer and the employee contribute to the EPF while only the employer makes contributions to the EPS account. 

But both of them are savings schemes initiated by the government for employees.

EPF vs EPS - At a Glance

What is EPF?

Now that you know a little about EPS vs EPF, let us take a look at the EPF closely.

EPF stands for Employee Provident Fund and this scheme was launched under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. 

Herein, the employer deducts a certain amount from your monthly salary and puts it in your EPF account, along with their contribution. 

It comes under the Ministry of Labour and Employment, and is a compulsory scheme for all employers who employ more than 20 people. In some cases, organizations employing less than 20 people also have to be part of the scheme, depending on terms and conditions. 

Features and Benefits of EPF

The major goal of this scheme was to inculcate a habit of a systematic contribution towards one’s retirement funds. Some other benefits are listed here - 

• 12% of your basic pay is invested in the EPF account 

• The employer pays only 3.67% of the other 12% that they need to pay (the remaining 8.33% goes to the EPS account)

• It helps to build your retirement corpus

• It has certain tax exemptions that you can enjoy

• If you change your job, the EPF account is transferable to your new employer

• The employee can voluntarily make a bigger contribution every month

• A percentage of the money can be withdrawn for buying property

• 90% of the total amount can be withdrawn if you are above the age of 54

• Final settlement can be done once the employee reaches 55 years of age and completes 10 years of service

What is EPS?

To be able to get a better answer to ‘EPS vs EPF’, take a look at the EPS in detail.

EPS stands for Employee Pension Scheme and was started by the EPF Organization in 1995. This scheme applies to everyone covered under the Miscellaneous Provisions Act, 1952.

Under this scheme, the employer contributes 8.33% of the employee’s base pay to the pension fund every month. This money is not deductible from the employee’s salary.

The benefits can be availed by an employee after the age of 58, if they have completed 10 years of service. The amount is given to the employee with some added interest every month, which depends on the age and the funds available in the EPS account. 

When can EPS be availed?

The pension from the EPS can be availed post retirement at the age of 58, on the condition that contributions have been made for 10 years in the EPF account. There are other instances to avail this pension which are mentioned below - 

• The employee can avail the pension for the rest of their life in case of any permanent disability

• The Widow Pension or the Vridha pension can be availed by the widow of a deceased EPF member

• The children of the deceased EPFO member are eligible to receive the Child Pension till they turn 25 years of age. The amount is supposed to be 25% of the widow pension, and can cover up to 2 children 

• In case the deceased EPFO member does not have a surviving widow, the children are eligible for the Orphan Pension. Up to 2 children can receive 75% of the widow pension amount every month

• An EPFO member who wishes to withdraw a reduced pension, can do so after they turn 56 years of age. They will get the payouts at the rate of 92% of the original amount

If you were searching for EPS vs EPF, you must have understood they are both interrelated. Both are part of the same scheme, and contributions to the EPF account are necessary to be able to reap the benefits of the Employee Pension Fund.

The major differences however lie in how and when they can be withdrawn. Also the contributions made by the employee and employer vary greatly from the EPF to EPS.