EPF vs EPS: Planning for retirement? Know benefits, interest rate & more
The two schemes, EPF and EPS, governed by the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952, make retirement planning simpler for salaried workers in India.EPF provides a safer and disciplined route for long-term savings while the alternative, EPS, is an annutiy plan that gives you regular income while retiring.EPF The EPF is open exclusively to employees working in companies registered with the Employees’ Provident Fund Organisation (EPFO).
Any firm with more than 20 staff must offer this scheme.
Both the employee and the employer contribute 12% of the salary (basic pay plus dearness allowance).
The employer’s share is split, with 3.67% going into the fund and the rest into the EPS. The EPF offers 8.25% interest for 2024-25, reviewed every year.
Contributions qualify for tax deductions under Section 80C up to Rs 1.5 lakh, while interest is tax-free up to Rs 2.5 lakh annually.
Withdrawals are tax-free only under certain conditions.EPS The EPS provides a regular pension starting at age 58, after at least 10 years of service.
Only the employer contributes 8.33% of the salary to this scheme.
In the event of the employee’s death, the pension continues to the nominee, ET reported. Together, EPF and EPS give salaried Indians a safe way to save and a reliable income after retirement.Here is how the two schemes differ:
| Feature | Employees’ Provident Fund (EPF) | Employees’ Pension Scheme (EPS) |
|---|---|---|
| Purpose | Long-term savings for retirement | Regular pension after retirement |
| Eligibility | Salaried employees in companies registered with EPFO (companies with >20 employees) | Only for EPF members |
| Contribution | 12% of salary from employee +Dear allowance | Only employer contributes: 8.33% of salary |
| Interest/Return | Reviewed on an annual basis | No interest paid |
| Withdrawal | Up to 100% of eligible corpus.
25% of the corpus must remain till the end of the career. |
Pension starts at age 58 after 10 years of service; continues to nominee after employee’s death |
