Definition
EPS (Employees' Pension Scheme)
EPS is a pension scheme for salaried employees, funded from the employer's EPF contribution, that provides a monthly pension after retirement.
The Employees' Pension Scheme (EPS) runs alongside the EPF. While you contribute fully to EPF, a portion of your employer's contribution is diverted to EPS to fund a monthly pension payable from the eligible retirement age. The employee does not contribute extra specifically to EPS.
The pension amount is based on a formula using your pensionable salary and years of pensionable service, subject to a minimum and a wage ceiling that has been the subject of legal disputes over 'higher pension' options. A minimum number of years of service is required to qualify for pension.
EPS provides a basic safety net but the pension is usually modest, so it should be supplemented with other retirement savings like NPS, PPF or mutual funds for a comfortable retirement.
Related terms
- AnnuityAn annuity is a financial product that pays a regular income stream, typically for life, in exchange for a lump sum — used mainly to secure income in retirement.
- NPS (National Pension System)The National Pension System is a government-backed, market-linked retirement scheme regulated by PFRDA that builds a corpus over your working life and converts part of it into a pension.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.