EPF vs EPS: Differences in Contribution, Withdrawal, Pension and Tax
CA Meet Dhrangadhariya 
October 8, 2026
CA Meet Dhrangadhariya October 8, 2026
Table of Contents
4 min readTable of Contents
Last updated: 08 October 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP
Quick summary
Both the Employees’ Provident Fund (EPF) and the Employees’ Pension Scheme (EPS) run under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and are managed by the EPFO. They are two parts of the same deduction on your payslip, but they do different jobs: EPF is a savings pot that you take as a lump sum, EPS is a pension.
Both you and your employer contribute 12% of your wages (basic salary plus dearness allowance) to your EPF account every month. The balance earns interest declared by the government each year, and you can take the whole amount at retirement. Of the employer’s 12%, only part reaches this account, as explained below.
EPS pays a monthly pension to the member after retirement, and to the family on the member’s death. You do not contribute to it. It is funded from the employer’s 12%: 8.33% of wages goes to EPS and the remaining 3.67% goes to EPF.
| Point | EPF | EPS |
|---|---|---|
| Your contribution | 12% of wages | Nil |
| Employer contribution | 3.67% of wages | 8.33% of wages (wages counted up to Rs 15,000, so at most Rs 1,250 a month) |
| Interest | Yes, declared every year | No interest, it is a pension entitlement |
| What you receive | Lump sum of contributions plus interest | Monthly pension, or a withdrawal benefit if service is under 10 years |
| Pension age | Not applicable | 58 years (reduced early pension possible from 50) |
| Who is covered | Employees of covered establishments; wages up to Rs 15,000 are compulsory, above that by joint option | Members who joined before 58 and whose wages are counted up to the ceiling |
On 13/10/2025 the EPFO Central Board of Trustees decided to simplify withdrawals. As reported at the time:
Reports from mid-2026 say the Government has since notified the EPF Scheme, 2026 (stated to be effective from 29/06/2026) to give effect to these changes. Reports differ on the exact waiting period for the balance on leaving a job, so read the current text of the Scheme and EPFO circulars on the EPFO website before you apply. Retirement at 58 is unchanged.
If you plan to leave a job before 10 years, check your EPS service on the passbook and decide between the withdrawal benefit and carrying the service forward with a scheme certificate. For long-term savings, EPF is the bigger balance. If your wages are above Rs 15,000, ask whether your employer contributes on the actual wage or on Rs 15,000.
No. EPS is funded by the employer’s share only (8.33% of wages, with wages counted up to Rs 15,000 a month). Your own 12% goes entirely to EPF.
8.33% of wages goes to EPS and the balance 3.67% goes to EPF. For wages above Rs 15,000 the EPS part is capped at Rs 1,250 a month unless the higher pension option was exercised.
No. EPS builds service and pensionable salary, not a balance. EPF earns interest declared by the government every year.
At 58. A reduced early pension is possible from age 50, as long as you have 10 years of service.
If you have less than 10 years of service you can take a withdrawal benefit, or get a scheme certificate to carry the service to the next employer. Final pension withdrawal now needs 36 months out of employment.
Interest on your own contributions up to Rs 2.5 lakh a year is tax free (Rs 5 lakh if there is no employer contribution). Interest on the part above the limit is taxable.
This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.
CA Meet Dhrangadhariya October 8, 2026
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