Difference between EPF and EPS
Table of Contents
What is Employees Provident Fund (EPF)?
Employees Provident Fund (EPF) is an income retirement benefits plan offered to workers in the business sector. Through monthly investments for both the employee and the company, the programme accumulates a return on asset. what is the difference between epf and eps.
Whom does EPF apply to?
The employee provident fund plan is available to any paid employee who has been a citizen of India.
Is it possible to withdraw EPF before maturity?
Yes, you may take money out of your PF account before you retire.
What is Employee Pension Scheme (EPS)?
Employees who are EPFO members and also have invested in the EPS account are eligible for a pension under the pension system. When an employee dies, the pension remains to be granted to the nominated person.
How to calculate the monthly pension?
Average salary * Pensionable Service / 70, where Average Salary refers to the average of the past 12 months’ Basic Salary + DA.
Is it possible to withdraw a lump sum from EPS
A person is able to withdraw a lump sum amount of EPS if one of the following two events occurs first
- If an EPS member departs before completing ten years of service.
- If such individual has reached the age of 58.
Is EPF or EPS account transferable
The Composite Claim Form will be used to transfer EPS online.
Difference between EPF and EPS
Key differences between EPF & EPS are as follows:
| Basis | EPF | EPS |
| Contribution to the plan | Employees contribute 12% of their income plus a dearness allowance.
3.67 percent of the pay + dearness allowance is contributed by the employer.
|
An employee makes no contribution.
8.33 percent of the wage + dearness allowance is contributed by the employer.
|
| Limitation on contributions | There really is no such thing as an absolute limit.
The ceiling is calculated as a percentage of the income plus the dearness allowance.
|
The monthly donation is restricted to Rs.1250. |
| Applicability | All employees have access to the EPF. |
Workers with a salary plus dearness allowance of less than Rs.15,000 are eligible for EPS. |
| Withdrawal of funds from a bank account | Employees can opt out of the EPF plan at any time. The sum withdrawn is taxed if it is taken before the conclusion of 5 years of service. However, if an employee has been jobless for 60 days in a row, the EPF balance might be entirely removed. | If the member has completed fewer than 10 years of service or has reached the age of 58, the member can take an early lump sum withdrawal.
Employees must have reached the age of 50 to be eligible for early retirement. |
| Payable Benefit | The amount payment is made once the employee reaches the age of 58 or if he or she has been jobless for 60 days in a row. | When an employee reaches the age of 58, he or she is entitled to a standard pension.
When an employee dies, the pension is continued to be given to the nominee.
|
| Interest | Upon its balance in the EPF Account, a specified interest rate is paid.
Each quarter, the state reviews and adjusts the rate. The current interest rate is 8.50 percent per year.
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On the EPS account, no interest has been declared. |
| Benefit from the tax system | The money invested, the interest received, as well as the amount repaid are all tax-free. | Employees may not receive any tax benefits on investments because they do not participate in the EPS.
The income from a lump-sum withdrawal is taxed. Furthermore, the pension received under the plan is taxed.
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FAQ’S
Is EPS transferred together with EPF?
The Composite Claim Form is used to transfer EPS online. Upon on job transfer, the member must sign in to the EPF Member Portal & request for an EPF transfer. The EPF and EPS accounts should be instantly moved to the new account.
What if EPF claim gets rejected?
The payment is forwarded to the PF department due to erroneous bank data or the IFSC Code. To resolve it, either update your KYC information or reapply for your PF.
How long does it take to file a PF claim online?
Your claims will be processed over three working days by the pension authority.
