Difference Between EPF And EPS
The two schemes, namely Employees’ Pension Scheme (EPS) and Employees’ Provident Fund (EPF) are two schemes under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952. The Central Board of Trustees, comprising State and Central Government representatives, employees and employers, administer the EPF and EPS.
Do you want to know the difference between EPS and EPF? Keep reading to get the answer!
What Is EPF?
The Employees’ Provident Fund Organisation (EPFO) controls a retirement scheme, EPF, which helps people save their money. Every member contributing to the fund gets a Universal Account Number (UAN). This number will be constant throughout the individual’s employment life. All EPF-related information can be accessed using the UAN.
What is EPS?
The Government of India backs a retirement scheme known as EPS. Under this scheme, nominees of members also get pensions. However, employees do not contribute to EPS. A member can check the pension amount in the EPFO portal using UAN.
How Are EPF and EPS Different?
EPS and EPF have different compositions and eligibility. Let’s discuss the basic differences between them.
| Elements | EPF | EPS |
| Employer’s Contribution | 3.67% of (dearness allowance + basic salary) | 8.33% of (dearness allowance + basic salary) |
| Employee’s Contribution | 12% of (dearness allowance + basic salary)10% of (dearness allowance + salary) in an establishment with less than 20 employees | No contribution |
| Eligible Employees | All employees | Employees whose dearness allowance + basic salary is within Rs. 15,000 |
| Contribution Limit | No specific limit | Up to Rs. 1250 per month |
| Interest Rate | 8.5% p.a. for Financial Year 2020-21The Government of India reviews the rate every year. | No interest rate |
| Age of Withdrawal | An employee can withdraw the money at any time. If the fund is withdrawn before five years of service, the withdrawn sum is taxed. In case an individual is unemployed for 60 days, the entire balance can be withdrawn. | For early withdrawal – at least 10 years of serviceFor early pension – An employee must have attained 50 yearsFor regular pension – An employee must be 58 years old |
| Tax Benefits | Employer contribution- tax-freeEmployee’s contribution – tax-deductible under the Income Tax Act (Section 80C) | Contribution – tax-deductible as per Section 80C of the Income Tax Act, 1961 |
Also Read –https://navi.com/blog/best-tax-saver-investments/
How to Calculate EPF?
An example of EPF calculation is cited below for your understanding –
- Basic salary + Dearness allowance of Shyam = ₹ 26,000
- EPF contribution of Shyam = 12% × Rs. 26,000 = ₹ 3120
- Contribution of Shyam’s company, XYZ Pvt. Ltd., towards EPF = 3.67% × Rs. 26,000 i.e. Rs. 954.20
- XYZ’s contribution towards EPS = 8.33% × Rs. 26,000 = Rs. 2165.80
- Contribution of XYZ towards EPF on threshold income, i.e., Rs. 15,000 = 8.33% × Rs. 15,000 = ₹ 1249.50
- Excess contribution of XYZ = Rs. (2165.80 – 1249.50) = Rs. 916.30
- Total contribution towards EPF = ₹ (3120 + 954.20 + 916.30) = ₹ 4990.50
- As per the guidelines of EPFO, the sum is rounded off to ₹ 4990, which is the nearest decimal.
How to Calculate EPS?
As mentioned above, contributions are different for EPF and EPS. Let’s see how EPS is measured for Shyam!
- The formula for calculating pension per month = (Pensionable salary × Pensionable service) ÷ 70
- Basic salary + Dearness allowance = Rs. 26,000
- Contribution of XYZ towards EPS = 8.33% × Rs. 26,000 = Rs. 2165.80
- Since Rs. 1250 can be the maximum pension amount, the remaining amount gets added to XYZ’s EPF share.
Also Read – https://navi.com/blog/calculating-tds-on-salary/
Final Word
Both EPF and EPS are employee welfare policies that differ in structure. All salaried individuals working in factories and companies need to understand the benefits associated with the two. If you want to get more information about the two schemes, visit the EPFO website.
Frequently Asked Questions
What are the mediums to check the status of EPF?
People who have registered on the member portal of UAN can check PF status through the following mediums:
- Visit the official EPFO portal
- Download Umang Application from Play Store/App Store
- Type EPFOHO <UAN> <LAN> and SMS to 7738299899. Here, LAN denotes the language you want to choose. For example, you can type ENG for English.
- Give a missed call to 011-22901406
How to print EPF passbook?
The Member ID of the EPS account is the same as that of the EPF account. An employee can download the EPF passbook from the EPFO portal by following these steps:
- Type UAN and password and click on “Login”.
- Member IDs of your Provident Fund accounts connected with the UAN will be shown to you. Click on Member ID under “Select Member ID to View Passbook”.
- Your passbook appears in a new tab. It can be printed and downloaded directly.
Does a stipend include EPF?
As per EPF Act, interns or trainees are not employees by definition. EPF cannot be deducted from the earning of an intern or a trainee because of the following reasons:
- They come under either Industrial Employment Act or Apprenticeship Act
- They are working under recognised institutions and pursuing on-the-job training.
Which components are excluded in EPF calculation?
Following is the list of components excluded from EPF calculation –
- Commissions or bonuses payable
- Incentives given to an employee
- Canteen allowance
- Relocation allowance
- Overtime allowance
- Washing allowance
- Night shift allowance
- Attendance allowance
- House rent allowance
Can an employee avail the Pension Fund only without having a PF contribution?
No, only a member of the Provident Fund can be enrolled under the Pension Scheme. From 1st September 2014, any individual joining a company and earning a salary above Rs. 15,000 per month can get PF membership by submitting options according to Para 26(6) of the EPF scheme.
He/she will not get Pension Fund membership. In the case of all such individuals, both employer’s share (12%) and employee’s share (12%) will be contributed to the PF.
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This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
