What is the Difference between Provident Fund & Pension Fund?

What is the Difference between Provident Fund & Pension Fund?

EPF (Employee Provident Fund) Contribution

  • When you start working, you and your employer both contribute 12% of your basic salary into your EPF account

Provident Fund & Pension Fund Contribution

  • The entire 12% of your contribution goes into your EPF account.
  • Along with this 3.67% (out of 12%) from your employer goes into your EPF account.
  • While the balance 8.33% from your employer’s side is diverted to your EPS (Employee’s Pension Scheme) – Capped at 1,250 Rupees PM
  • Government has moved on from EPF to NPS for its employees.
  • The interest is the prevailing interest rate and is fixed by RBI frequently.

Example:

  • Let us say, your contribution is Rs 3,000 (Assuming basic pay is Rs 25,000. 12% of this would be Rs 3,000).
  • Your employer’s contribution will also be Rs 3,000 but would be split as follows.
  • EPF – Rs 1,750 and
  • EPS – RS 1,250
  • Total Contribution Each Month:
  • EPF = 3000 + 1750 = 4750
  • EPS = 1250

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