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When we talk about future financial security, EPF (Employees' Provident Fund) and EPS (Employees' Pension Scheme) are two very important schemes. Both of these are government schemes, which gradually accumulate money during your job and become financial support at the time of retirement.

Although both these schemes come under the same law i.e. 'Employees' Provident Fund and Miscellaneous Provisions Act 1952', their objective and method of working are different from each other. Let us understand in simple words what is the difference between the two schemes and which one is more beneficial for you.

What is EPF?

EPF i.e. Employees Provident Fund, is a fund in which a part of your salary is deposited every month. This money is 12% of your salary (basic salary + dearness allowance), which both you and your employer deposit.

Out of the 12% employer's amount, a part, i.e. 3.67%, goes to EPF and the remaining part goes to EPS (Pension Scheme). EPF is a kind of long-term savings, on which the government gives a fixed interest rate every year. At present this interest rate is 8.25% (2024-25), which is tax free but with some conditions. You can withdraw money from EPF after changing or leaving the job, but there are some rules for this.

What is EPS?

EPS i.e. Employee Pension Scheme, is a scheme which has been created to give you monthly pension after retirement. The special thing in this is that only the employer contributes in this, not the employee. The employer deposits 8.33% of your salary in the EPS fund. When you have been in the job for at least 10 years and your age is 58 years, then you become eligible for pension. If the employee dies, his nominee continues to receive the pension. This means that this scheme provides security not only for you but also for your family.

Which plan is better for whom?

If you want to have a large lump sum amount at retirement, then EPF is better for you. But if you want a fixed income every month after retirement, then EPS will give you relief. Both the plans together strengthen your retirement security. Therefore, it is important that you remain aware of these and keep contributing regularly during your job.