Employees’ Provident Fund (EPF) & Employees’ Pension Scheme (EPS): Complete Guide for 2025

The Employees’ Provident Fund (EPF) and Employees’ Pension Scheme (EPS) are two of the most important social security schemes for salaried employees in India. Managed by the Employees’ Provident Fund Organisation (EPFO), these schemes ensure financial security after retirement and offer multiple benefits for employees and their families.

In this guide, we'll cover everything you need to know about EPF and EPS, including their benefits, contribution structure, withdrawal rules, latest updates, and more.

What is Employees’ Provident Fund (EPF)?

The Employees’ Provident Fund (EPF) is a mandatory retirement savings scheme designed for salaried employees in India. Under this scheme, both employees and employers contribute a fixed percentage of the employee's salary to a provident fund account, which grows over time with interest.

Key Features of EPF:

• Eligibility: Mandatory for employees earning up to ₹15,000 per month. Voluntary enrolment is also possible.

• Contribution Rate: Both employee and employer contribute 12% of Basic Salary + Dearness Allowance (DA).

• Interest Rate: The EPF interest rate is declared annually by the government.

• Tax Benefits: Contributions qualify for tax deduction under Section 80C of the Income Tax Act under old regime.

• Withdrawals: Partial withdrawals allowed for housing, education, marriage, or medical emergencies.

• Universal Account Number (UAN): Ensures portability of EPF accounts across jobs.

What is Employees’ Pension Scheme (EPS)?

The Employees’ Pension Scheme (EPS) is a pension program under EPFO that provides lifelong monthly pension benefits to employees after retirement. It also covers family members in case of the employee’s death.

Key Features of EPS:

• Contribution to EPS: Out of the employer’s 12% EPF contribution, 8.33% goes to EPS (subject to ₹15,000 salary cap, i.e., ₹1,250/month max).

• Eligibility for Pension: Requires a minimum of 10 years of service.

• Pensionable Age: Pension starts at 58 years of age.

• Family Pension Benefits: Provides monthly pension to nominee/spouse/children after the death of the employee.

Difference Between EPF and EPS

Aspect	EPF	EPS
Purpose	Retirement corpus accumulation	Monthly pension after retirement
Contributions	12% from both employee and employer	8.33% from employer’s share
Interest	Annual interest credited	Pension based on formula, no interest
Withdrawal	Lump-sum after retirement/resignation	Monthly pension post-retirement
Portability	Fully portable through UAN	Service continuity needed for benefits

Latest Updates on EPF & EPS (2025)

• Higher Pension Option: EPFO has allowed eligible employees to opt for a higher pension based on actual salary, exceeding the ₹15,000 wage ceiling, following Supreme Court directives.

• Digital Services: Enhanced online facilities for EPF balance check, KYC update, claims, and transfer through EPFO Member Portal & UMANG app.

• Faster Grievance Redressal: Improved resolution timelines through EPFiGMS platform.

Benefits of EPF and EPS for Employees

Benefits of EPF:

• Retirement savings with compounding interest.

• Tax benefits under Section 80C.

• Financial security in emergencies.

• Employer contributions add to long-term wealth.

Benefits of EPS:

• Guaranteed monthly pension after retirement.

• Family pension for dependents.

• Financial protection against loss of income post-retirement.

Challenges & Suggested Reforms

• Low EPS Pension Amount: Due to salary caps, EPS pensions remain modest. Reforming contribution limits and enhancing benefits is crucial.

• Awareness Gap: Many employees lack clarity on EPS benefits and higher pension options.

• Need for Modernization: Simplifying processes and offering more flexibility can improve the attractiveness of these schemes.

Conclusion

The Employees’ Provident Fund (EPF) and Employees’ Pension Scheme (EPS) play a vital role in securing the financial future of India's salaried workforce. While EPF helps build a retirement corpus, EPS ensures a steady income after retirement. Staying informed about these schemes and making optimal use of available options is essential for long-term financial well-being.