Definition
EPS Contribution
The Employees' Pension Scheme is funded by diverting part of the employer's EPF contribution; it provides a monthly pension after retirement based on service and pensionable salary.
Under EPS, a portion of your employer's EPF contribution is routed into a pension fund rather than into your provident fund balance. This builds your entitlement to a monthly pension after retirement, calculated on your years of pensionable service and pensionable salary.
You generally need a minimum number of years of contributory service to qualify for pension. Because EPS draws from the employer's share, it reduces how much of that share grows in your EPF corpus, trading lump-sum savings for guaranteed pension income.
EPS provides a defined, lifelong income stream in retirement, complementing the EPF lump sum, with provisions for family pension in case of the member's death.
Related terms
- GratuityGratuity is a lump-sum payment an employer gives an employee for long service, generally payable after completing five years, with tax exemption up to a prescribed limit.
- CTC vs Gross vs In-Hand SalaryCTC is the total cost a company bears for you, gross salary is your pay before deductions, and in-hand (net) salary is what actually reaches your bank after taxes and contributions.
- EPF (Employer & Employee Split)The Employees' Provident Fund is a retirement savings scheme where both you and your employer contribute a percentage of basic pay each month, building a corpus that earns interest.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.