EPF vs EPS Explained: Benefits, Eligibility & Withdrawal Rules

If you’re a salaried employee in India, chances are EPF vs EPS shows up on your payslip—but understanding it feels harder than it should be. Most people know money gets deducted every month, but very few truly understand What is EPF?, What is EPS?, and how these schemes actually shape retirement.

This guide on EPF vs EPS Explained: Benefits, Eligibility & Withdrawal Rules cuts through the confusion and explains everything—clearly, practically, and without jargon.

EPF vs EPS: A Quick Overview 

Feature	EPF (Employees’ Provident Fund)	EPS (Employees’ Pension Scheme)
Purpose	Long-term retirement savings	Monthly pension after retirement
Contribution	Employee + Employer	Employer only
Interest	EPF interest rate	EPS interest rate (formula-based)
Withdrawal	Partial & full allowed	Restricted
Tax Benefit	Mostly tax-free	Pension taxable

What is EPF? (Employees’ Provident Fund)

What is EPF?
EPF is a mandatory retirement savings scheme where both you and your employer contribute 12% of your basic salary plus DA every month. Over time, this builds a sizeable retirement corpus.

Key Features of EPF

• Government-backed and low-risk

• Compounded annual interest

• Partial withdrawals allowed

• Strong tax advantages

EPF Interest Rate

The EPF interest rate is declared annually and compounds over time. This compounding is what turns small monthly deductions into a powerful retirement fund.

EPF Calculation

• Employee contribution: 12%

• Employer contribution: 12%

• Interest applied yearly on total balance

EPF Benefits

• Lump-sum amount at retirement

• Emergency financial support

• Safe alternative to market-linked investments

EPF Eligibility

• Mandatory for employees earning up to ₹15,000

• Optional but allowed for higher salaries

EPF Withdrawal

Yes, EPF Withdrawal (withdrawal) is flexible:

• Medical emergencies

• House purchase or construction

• Education or marriage

• Unemployment

EPF Rules

• Tax-free after 5 years of service

• PAN required to avoid TDS

What is EPS? (Employees’ Pension Scheme)

What is EPS?
EPS is designed to give you a monthly pension for life, not a lump sum. It is funded entirely by the employer’s contribution.

Key Features of EPS

• Guaranteed lifelong pension

• Spouse pension after death

• No employee contribution

EPS Interest Rate

Unlike EPF, EPS interest rate is not compounded. The pension depends on salary and service length.

EPS Calculation

EPS calculation formula:
(Pensionable Salary × Pensionable Service) ÷ 70

EPS Benefits

• Monthly income after retirement

• Family pension protection

• No market risk

EPS Eligibility

• Minimum 10 years of service

• Retirement age: 58

EPS withdrawal

• Less than 10 years: lump sum

• More than 10 years: pension only

EPS rules

• Early pension allowed at 50 (reduced)

• No full withdrawal after eligibility

EPF vs EPS: Key Differences Explained

Aspect	EPF	EPS
Nature	Savings	Pension
Returns	Interest-based	Formula-based
Liquidity	High	Low
Risk	Very low	Zero market risk

EPF vs EPS benefits

Comparing EPF vs EPS benefits isn’t about choosing one—it’s about understanding their roles.

• EPF = Wealth creation

• EPS = Income stability

Together, they form a complete retirement solution.

EPF Withdrawal vs EPS Withdrawal

• EPF Withdrawal: Flexible and need-based

• EPS withdrawal: Limited and rule-driven

Knowing this difference avoids unpleasant surprises later.

Frequently Asked Questions (FAQs)

1. What is EPF vs EPS in simple terms?

EPF is your retirement savings; EPS is your pension.

2. Is EPS mandatory with EPF?

Yes. You cannot opt out of EPS if you’re in EPF.

3. How does EPS calculation work?

EPS calculation uses salary and service—not interest.

4. Is EPF interest rate guaranteed?

It’s government-backed but declared yearly.

5. Can I withdraw EPS like EPF?

Only if service is under 10 years.

6. Which is better—EPF or EPS?

Both serve different purposes and work best together.

Conclusion: 

EPF vs EPS Explained: Benefits, Eligibility & Withdrawal Rules isn’t just theory—it directly affects your financial future. EPF builds your retirement wealth, while EPS ensures you never run out of monthly income.

Understand both early, track them regularly, and retirement won’t feel like a gamble—it’ll feel planned.