How does EPF work?

EPF, being a retirement benefit scheme, ensures that all salaried employees can save a considerable amount of money spend their retirement days. The scheme allows you and your employer to contribute 12% of your basic salary towards your EPF account. Thus, the total EPF contribution to your account per month is 24% of your basic salary. The amount deposited in your EPF account can be withdrawn when you change job or need money to meet your personal needs. EPF transfer can be done from one organization to another.

What is EPS?

It is a pension scheme that offers widow pensions, pension on debasement. Under this scheme, nominees can also receive pensions. Out of the total contribution made by your employer, 8.335 goes toward your EPS account. The amount deposited towards your EPS account is subject to a maximum of Rs. 1250. In order to enjoy the benefit of this scheme, an employee’s basic salary needs to be Rs. 6500 per month.


EPF accounts provide attractive interest on your investments, and it is determined by the central government of India. Currently is 8.75%. But, EPS being a pension scheme does not offer any interest. Interest is not applicable. Hence, no interest is earned on the amount accumulated in EPS.

In case of EPS, you have the option to withdraw your entire savings or get it transferred by obtaining a ‘scheme certificate’, provided there is a break in service period and your service period d is less than 10 years.

The employer does not have to make any contribution towards the EPS account. Only the employer contributes to this account. But, your EPF account receives contribution fro both employer and employee.

EPS provide pension benefits. Under this scheme, lifelong pension is available to the member and upon his death members of the family are entitled for the pension. Employees can receive pension after serving for a minimum period of 10 years and reaching the age 50. But, EPF account does not provide such pension benefits.

Thus, it is clear that when you are salaried individual and invest in an employee provident fund account, automatically your employer enroll you for the Employee Pension Scheme. And, you can enjoy the benefits of EPS without paying any extra amount.

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