What is the Employees' Pension Scheme (EPS)?

The Employees' Pension Scheme (EPS) is a pension component of India's provident fund system that provides a monthly pension to employees after retirement. It is funded out of the employer's provident fund contribution, not by an extra deduction from the employee. A defined portion of the employer's share is diverted to EPS each month, building a pension entitlement that the employee can draw from later in life. Like provident fund, it is administered by the Employees' Provident Fund Organisation (EPFO).

How is EPS funded?

EPS sits inside the wider provident fund contribution rather than being a separate deduction. The split works as follows.

• From the employer's share: 8.33 percent of the employer's 12 percent contribution is directed to EPS.
• Wage ceiling: the EPS contribution is calculated on a wage ceiling of 15,000 rupees (about 180 US dollars), so it is capped at about 1,250 rupees (about 15 US dollars) per month.
• No employee deduction: the employee's own contribution goes entirely to provident fund, not to EPS.

Who is eligible for an EPS pension?

EPS converts years of contribution into a pension, subject to age and service conditions. The key eligibility points are below.

• Minimum service: at least 10 years of eligible service is generally required to receive a regular pension.
• Pension age: the pension normally becomes payable at age 58, with options for early or deferred pension.
• Shorter service: employees with less than 10 years can withdraw the EPS amount instead of drawing a pension.

EPF and EPS at a glance

Provident fund and pension are easy to confuse because they share one contribution. The table separates them.

This information is for general guidance. Confirm current rates and thresholds and consult experts for your specific situation.