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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
The interest is the prevailing interest rate and is fixed by RBI frequently.
Example:
Let us say, your contribution to EPF 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
