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Assessing the Major Retirement Schemes: EPS, EPF, GEPS

A pension is a kind of a retirement plan, where people receive a fixed sum of money on regular basis from a fund to which they and their employer have contributed over the period of their employment. Though many pension plans are available in the market but the most common ones are Employee Pension Scheme (EPS), Employee Provident Fund (EPF) and Government Employees Pension Scheme (GEPS).

Employee Pension Scheme (EPS)

The Employee’s Pension Scheme (EPS), 1951, replaced the Family Pension scheme (1971). Funds for EPS are sourced, primarily by diverting 8.33% of employer’s monthly contribution from the EPF. Monthly contribution to EPS cannot exceed 8.33% of 6500 or Rs 541 p.m. The Government’s contributes 1.16% of the worker’s monthly wages if wages are less than Rs 6,500. The EPS doesn’t earn any interest. It is important to note that a service of more than six months and less than an year shall be treated as one year and the service of less than six months shall be treated as nil. The employee gets it life long and upon his death members of the family are eligible for the pension.

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An employee shall be eligible to receive pension under EPS only after (i) being in service for a minimum of 10 years (ii). is 50-58 years of age, pension cant be received before this age.

Employee Provident Fund (EPF)

Employee provident fund, EPF, is a hugely popular savings instrument in Indian established with a view to help employees save a portion of their salary for security during retirement. Contributions to EPF are made on a monthly basis mostly and are managed by EPFO (Employee Provident fund organization).

Provident Fund is deducted from the employee’s salary before it is deposited in the bank.  Employer matches the employee’s contribution (till 12%). The employer contribution is tax exempt however the employee’s contribution is taxable but eligible for deduction under section 80C of Income tax Act.



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EPF and EPS both, are calculated on Basic salary, cash value of food concession, Dearness allowances (DA) and retaining allowances (if any). EPF comes with an important advantage, which enables employees to make partial withdrawals from the sum of money saved for the purpose of marriage, illness, repay house loan and repairs. Though there are certain conditions that need to be fulfilled for each case. Interest calculation is done yearly, not monthly, and accrues opening balance plus monthly contribution. To avoid conflict at the time of  death of the employee, the employee is expected to nominate a person who can be the legal claimant to the money.

Since 2011, employees have been given the option to access their balance online.

Government Employee Pension Scheme (GEPS)

There has been confusion regarding the New Pension Scheme (NPS), GEPS, and EPF. Across, the globe, GEPS, NPS and EPF are used interchangeably depending on the technical differences between the three.

In the NPS, in the simplest terms entails a scheme one can invest money and receive a lump sum at the retirement and with a fixed monthly income.

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