Is the EPF or EPS account transferable?

Yes, both EPF and EPS accounts are transferable. The Employees' Provident Fund Organisation (EPFO) assigns a Universal Account Number (UAN) to every employee contributing to the savings schemes. This UAN remains the same throughout the employee’s career, ensuring continuity even when changing employers. If you switch jobs, you can continue contributing to your EPF account by simply informing your new employer of your UAN. To transfer your EPF funds online, you need to activate your UAN and link it to your Aadhaar and PAN numbers.

What is a scheme certificate?

A Scheme Certificate is issued to EPF members who have completed at least 10 years of service but leave employment before reaching the age of 58. The certificate allows employees to retain their EPFO membership when they join a new company. If an employee wishes to withdraw the EPF contributions or unlock pension benefits after the age of 58, they may also request a scheme certificate. This certificate serves as a record of their pensionable service.

What happens to EPS if the PF is transferred?

When you transfer your EPF account to a new employer, your EPS account becomes inactive. However, the EPS balance will be transferred to your new EPF account. This ensures that your pensionable service is preserved, and you continue accumulating pension benefits under the Employee Pension Scheme (EPS).

EPF vs. EPS: Applicability, Eligibility & Other Points of Differences

The Employees' Provident Fund (EPF) and the Employees' Pension Scheme (EPS) are integral components of a country's social security system, designed to provide financial security to employees in their retirement years. EPF and EPS were laid out under the Employee’s Provident Fund and Miscellaneous Provisions Act in 1952.

While EPF majorly focuses on accumulating savings for retirement, EPS extends pension-related benefits post-retirement. This blog shall further dive into the topic of EPF vs. EPS, discussing their applicability, eligibility criteria and other details.

What is EPF (Employees' Provident Fund)?

The EPF or provident fund scheme accounts for the savings towards an individual’s retirement. According to the framework of the scheme, both the employer as well as the employee of an association must contribute towards the employee’s provident fund (PF) account. The consistent contribution accumulates with time, up until their retirement and they can withdraw a lump-sum amount alongside interest after they retire.

The EPF scheme offers regular interest on the contributions made to the EPF account, helping to grow the employee's savings over time. For instance, the interest rate for the financial year 2023-24 was set at 8.25%.

Both the employer and the employee contribute 12% of the employee’s salary (which includes basic salary and dearness allowance) to the EPF account, ensuring that the employee's retirement fund is consistently bolstered. This joint contribution helps in building a substantial corpus for the employee's future financial security.

What is EPS (Employees' Pension Scheme)?

The EPS provides a pension to employees who are members of the Employees' Provident Fund Organisation (EPFO). Employers are obligated to contribute to the employee's EPS account, but employees themselves do not make any contributions.

The employer’s contribution to the EPS is set at 8.33% of the employee’s salary, which includes both basic salary and dearness allowance. The pension from this scheme is offered to the employee after 58 years of age.

Eligibility Criteria to Apply for EPF

The following categories of people are eligible for EPF:

Employees working in an organisation that is registered under the Employees’ Provident Fund Organisation (EPFO)
Employees of organisations with a workforce of 20 or more employees are automatically covered under the EPF scheme.
Salaried employees who are earning up to ₹15000 salary (basic and dearness allowance)
Employees earning more than ₹15,000 can voluntarily opt to contribute to the EPF scheme, though it is not mandatory for them.

Eligibility Criteria to Apply for EPS

The following categories of people are eligible for EPS:

Employees of organisations that are registered under the Employees' Provident Fund (EPF)
Employees of an organisation that have completed at least 10 years of service
Employees who earn a basic salary of up to ₹15,000 per month.

How to Calculate EPF?

To understand the EPF calculation procedure, let us consider an example

An employee's basic salary and dearness allowance is ₹14,000. The employee's contribution towards their EPF would be 12% of ₹14,000.

This value amounts to ₹1,680.

On the other hand, The employer also contributes 12% of the employee’s basic salary and dearness allowance. However, this contribution is split between two components:

8.33% goes towards the Employee Pension Scheme (EPS) account.
3.67% goes towards the employee’s EPF account.

3.67% of ₹14,000 = ₹514.80 (contributed to the EPF account)

Thus, in total, ₹1,680 (employee contribution) + ₹514.80 (employer EPF contribution) = ₹2,194.80 will be added to the employee's EPF account for that month.

How to Calculate EPS?

The monthly pension amount under EPS can be calculated by applying a simple formula. Here is the formula for your reference:

(Pensionable Service x Pensionable Salary)/70 = Monthly pension

Pensionable Salary: This is the average basic salary of an employee over the last 5 years before retirement.
Pensionable Service: This refers to the total period of service during which the employee contributed to both the EPF and EPS accounts. This period is considered when calculating the pension.

Example: An individual’s basic salary and dearness allowance amounts to ₹25,000. The employer makes a contribution to the EPS, at 8.33% of ₹25,000.

The value amounts to ₹2,082.50.

However, since the maximum amount of pension which can be contributed is limited to ₹1,250, the surplus amount shall be added to the employer's contribution to the EPF account.

Comparison between EPF & EPS

The table below lists the differences between EPF and EPS:

Category	EPF	EPS
Contribution of the Employee	12% of their basic salary + dearness allowance	The employee does not have to contribute
Contribution of the Employer	3.67% of the employee’s basic salary + dearness allowance	8.33% of the employee’s basic salary + dearness allowance
Eligibility	All Employees	Employees entitled to a salary + dearness allowance up to Rs.15,000
Interest on the Investment	The interest amount is calculated every month. It is paid at the end of the Financial Year. Interest rates are fixed. However, they are reviewed by the Indian government at regular intervals.	Interest is not paid on the EPS account.
Upper Limit for Contribution	The upper limit on contribution is set to 12% of salary.	The upper limit on contribution is set to 8.33% on a salary up to Rs. 15,000, (amounts to Rs. 1250)
Tax	The interest amount received on the EPF account is exempt. However, if the contribution exceeds Rs. 2.5 lakh a year, tax is payable on interest earned on the extra amounts. If the employer’s contribution towards the NPS/EPF/superannuation fund in aggregate is above Rs 7.5 lakhs in a year, the excess amount will be taxable (employee’s obligation). If an individual withdraws the amount in their EPF account before 5 years, a TDS of 10% will be deducted.	Both, the pension as well as the lump-sum amount are taxable.
Funds Withdrawal Conditions	An individual may withdraw the funds upon marking 58 years of age. In alternative circumstances, such as being unemployed for a continuous period of 60 days or more, an individual may be allowed to withdraw funds from their EPF account.	An individual may withdraw the funds upon completing 58 years of age.
Premature Withdrawal Conditions	Premature and partial withdrawal may be allowed in exceptional cases like loan repayment, marriage, higher education of kids, unemployment, etc. However, specific criteria must be met.	An early pension may be paid out after completing 50 years of age. A lump-sum amount may be withdrawn once 58 years of age is completed. The individual has served for at least 10 years (whichever is attained earlier).
Premature Withdrawal Amount	Complete EPF balance may be withdrawn.	An amount corresponding with the number of years of service shall be withdrawn.
80C Deduction	The deduction is applicable up to Rs. 1.5 lakh of the employee’s contribution	No deduction applies as the employee does not contribute to the EPS account.
EPF vs EPS Nomination	The nominee will be entitled to a lump sum PF contribution amount post the member's death.	The nominee will get the pension amount monthly after the member's death.

Final Word

EPF and EPS are crucial savings schemes for employees in India. EPF majorly focuses on building a retirement corpus for the employees. On the other hand, EPS extends pension benefits for employees post-retirement. There are notable differences between EPF and EPS, especially in terms of withdrawal, contribution, tax and other benefits, applicability, interest, and more.

Make your choice between EPF vs. EPS while considering your financial aims and retirement plans. It is essential to make informed decisions in regard to your savings schemes to ultimately bag financial stability in the retirement years.

If you are in search of steady investment options beyond EPF or EPS, consider starting Fixed Deposits with Stable Money. With Stable Money, access high-interest FDs with a guarantee of security and growth of savings.