EPF vs EPS Made Simple: For Every Indian Employee
Why Retirement Planning is Important?
Imagine one day when you stop working — maybe at age 58 or 60. Your salary will stop, but your expenses won’t. That’s why the government helps salaried employees save money every month while they are working. This money can be used after retirement.There are two important saving schemes that help with this:
- EPF – Employee Provident Fund.
- EPS – Employee Pension Scheme.
- Both are handled by a government body called EPFO – Employees’ Provident Fund Organisation.
What is EPF? (Simple Explanation):
Think of EPF like a piggy bank for your retirement.
- Who saves? Both you and your employer.
- How much? Every month, 12% of your basic salary (plus DA) goes from your salary into this savings.
- Your employer also puts 12%, but only part of that (3.67%) goes into EPF.
- You earn interest (currently 8.25%) every year on this amount. It’s like your savings grow on their own!
When can you take the money?
- Normally after age 58 or if unemployed for 2 months.
- Partial withdrawal allowed for house, education, medical, etc.
- If you leave the job before 5 years, the money might be taxed.
Benefits of EPF:
- Your money grows with interest.
- It’s safe and backed by the government.
- You can track online using UAN (Universal Account Number).
- Tax saving under 80C (up to ₹1.5 lakh per year).
What is EPS? (Simple Explanation):
Now imagine after retirement, instead of giving you one big amount, the government says:“Don’t worry! I’ll send you a monthly pension till you’re alive.”That’s what EPS (Employee Pension Scheme) is.
- Only employer puts money here (8.33% of your salary, max ₹1250 per month).
- You don’t get any interest, but you’ll get a fixed monthly income after retirement (like a pension).
When do you get pension?
- After age 58, if you worked at least 10 years in total.
- You can take early pension from 50 years but at a reduced rate.
- Even if you die, your wife/children will continue to get pension!
Benefits of EPS:
- Monthly income after retirement.
- Family support in case of death.
- Government guarantees minimum ₹1000/month pension.
What’s the Difference (In One Table)?
| Point | EPF (Provident Fund) | EPS (Pension Scheme) |
|---|---|---|
| Purpose | Lump-sum savings | Monthly pension after retirement |
| Who contributes | You + Employer | Only Employer |
| Interest? | Yes, around 8.25% yearly | No interest, fixed pension only |
| Withdrawal | Full after 58; partial allowed | Starts at 58, monthly pension |
| Tax Benefit | Yes (under 80C) | Pension is taxable |
| Transferable? | Yes, with UAN | Yes, via service certificate |
| Family Benefit | Nominee gets balance | Widow/children get pension |
Tips
- Don’t touch EPF unless you really need to. It grows a lot over time.
- Check your EPF passbook online once a year.
- Keep your UAN active whenever you change jobs.
- EPS helps your wife/children too — so don’t ignore it.
- Together, EPF + EPS give you both lump-sum + monthly income. Best combo for retirement!
Real-Life Example
- Let’s say your basic salary is ₹15,000:
- You: ₹1,800 goes from your salary to EPF.
- Employer: ₹1,800 – from this, ₹1,250 to EPS, ₹550 to EPF.
- After 30 years, your EPF could grow to ₹25–30 lakhs.
- Your EPS may give you ₹3,000–5,000 per month pension depending on years of service.
Final Words for 2025 Employees
- Don’t ignore your EPF and EPS — they’re not deductions, they are your future money.
- Make sure your Aadhaar, PAN and bank account are linked to your UAN.
- Whenever you switch jobs, don’t withdraw EPF – transfer it instead.
- EPS is like monthly salary after you retire – protect it.
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