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!
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.
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.
EPS and EPF have different compositions and eligibility. Let’s discuss the basic differences between them.
|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 If the fund is withdrawn before five years of service, the withdrawn sum is taxed. In case an individual is unemployed for 60 days, the entire balance can be withdrawn.||For early withdrawal – at least 10 years of serviceFor early pension – An employee must have attained 50 yearsFor regular pension – An employee must be 58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|
An example of EPF calculation is cited below for your understanding –
As mentioned above, contributions are different for EPF and EPS. Let’s see how EPS is measured for Shyam!
Also Read – https://navi.com/blog/calculating-tds-on-salary/
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.
People who have registered on the member portal of UAN can check PF status through the following mediums:
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:
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:
Following is the list of components excluded from EPF calculation –
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.
Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.