What are EPS, NPS and EPF?

Hello everyone, Happy New Year to all of you

Today I am going to tell you what are EPS, EPF and NPS?

Both EPS and NPS are pension schemes. EPF and EPS both are for salaried people. In EPF both employer and employee contribute some percentage of amounts from employee basic pay while in EPS only employer contributes.   

EPS: It is a retirement saving scheme and the full form of EPS is Employees pension scheme. Under this scheme the employer has to contribute 8.33% of an employee’s basic pay plus dearness allowances. The basic pay will be Rs. 15,000 of an employee. It does not matter if actual basic pay is more than 15, 000 the employer’s contribution is calculated on 8.33% of Rs.15, 000. Employees get pension income when a person will attain the age of 58 years and must complete 10 years of services or 50 year of age for early pension. Employees don't contribute on his pension scheme like EPF (Employees provident fund) and in this scheme no interest is given on amount contributed by employer. The maximum amount deposited in Employees pension scheme is Rs.1, 250 in a month. It is meant for salaried person. The EPS is come under the Employees Provident Fund and Miscellaneous Act 1952.

 NPS: The full form of NPS is National Pension Scheme. The return of this scheme is linked to market in which 50% contribution is allocated with Equity market. This scheme is compulsory to government employees who provided services after 2004. Any individual can take advantages of this scheme. It is a voluntarily investment scheme. An individual who are eligible must have 18 years to 65 years age. It is a good retirement plan for businessmen or self employed person. Only 40% amount is withdrawn from NPS without paying any tax and 60% amount is invested to buy annuity plan. Full amount can be withdrawn at the time of retirement.

EPF: It is also a retirement saving scheme. The full form of EPF is Employees Provident Fund. The employer’s must contribute 12% of employees basic pay in which 3.67% deposited in EPF and in EPS 8.33%. And the employees also contributed 12% of his basic salary plus dearness allowances. The Employees Provident Fund and Employees Pension Fund are managed by Employees Provident Fund Organisation which was founded in 4 March 1952. The EPFO provides interest at a fixed rate. An individual can withdrawal the amount of EPF if he/she is not working for 2 months or more. An individual can transfer the account when he/she change their job from one organisation to another organisation. Employer’s contribution is calculated on basic pay of Rs. 15, 000 or actual basic pay whichever is less. If the basic salary is less then Rs. 15,000 then dearness allowance added to calculate employer’s contribution. It assured tax free return. If the amount withdrawal before 5 years of continuous services then the amount is taxable in the hand of employees. The total amount is withdrawn at the time of retirement. Under section 80 C it is eligible for deduction upto the maximum limit of 1.50lakh.