EPF, EPS & Social Security

The Employees' Provident Fund (EPF) is a mandatory retirement savings scheme for eligible employees in India. Both the employee and the employer contribute to the fund each month. Part of the employer's contribution is directed to the Employees' Pension Scheme (EPS).

The scheme also includes the Employees' Deposit Linked Insurance (EDLI), which provides life insurance to EPF members, funded by a separate employer contribution.

EPF/EPS/EDLI are administered under the Code on Social Security, 2020 (Act No. 36 of 2020), which consolidates nine earlier social-security laws. The Code on Social Security, 2020 became effective across India from 21 November 2025.

For historical context, the predecessor statute was the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 and its schemes. Records and calculations predating the Code's commencement were governed by the 1952 Act.

Specific contribution rates, wage ceilings and scheme parameters are set by EPFO notifications, circulars and central government orders under the Code.

EPF is a defined-contribution provident fund. Key features:

• Both employee and employer contribute each month
• Contributions accumulate in the member's EPF account with annual interest credited by EPFO
• The interest rate is declared annually by the central government on the recommendation of the Central Board of Trustees
• Withdrawals are permitted in prescribed circumstances (retirement, unemployment, emergencies as per scheme rules)

EPS is a defined-benefit pension scheme funded from part of the employer's EPF contribution. Key points:

• There is no employee contribution to EPS — it is funded entirely from the employer's share
• A monthly pension becomes payable on superannuation (subject to eligibility conditions)
• Minimum service period requirements apply for pension eligibility under scheme rules

PF contributions are calculated on “PF wages” — generally Basic Salary plus Dearness Allowance (DA). Other allowances such as HRA, special allowance and conveyance may or may not be included depending on the employer's salary structure and any applicable court/authority determinations.

The definition of “wages” under the Code on Social Security, 2020 is broader and may affect what components form the PF wage base. Verify with EPFO or a qualified professional for your specific structure.

The statutory wage ceiling for mandatory PF contribution is currently ₹15,000 per month (Basic + DA). Employees earning more than this amount may have PF calculated only on ₹15,000 unless the employer and employee agree to contribute on the actual (higher) wage under the applicable scheme rules.

The EPS monthly contribution is subject to a separate cap: currently ₹1,250 per month (8.33% of ₹15,000).

The Precision Payroll PF & Pension Calculator allows you to configure whether to apply the wage ceiling. This configuration affects both the calculator estimate and any projection. Verify the current ceiling from EPFO notifications before using results in payroll processing.

Of the employer's 12% contribution, 8.33% is allocated to EPS, subject to the EPS monthly cap. The remaining portion (typically approximately 3.67% of PF wages within the ceiling, or more in uncapped mode) goes to the EPF account.

The Precision Payroll calculator rounds EPS to the nearest rupee, consistent with EPFO's whole-rupee contribution crediting practice.

The PF corpus projection in Precision Payroll is an illustrative compound-growth model. Default assumptions:

• Annual interest rate: 8.15% p.a. (configurable — verify current declared EPFO rate)
• Monthly compounding model — beginning-of-period contributions
• Constant monthly contribution throughout the projection period
• No account of interim withdrawals, transfer delays or EPS pension calculations

The projected corpus is not an official EPFO balance or statement. It is a planning estimate. Actual balances depend on EPFO-declared annual interest rates, contribution history, withdrawals and administrative factors.

The PF & Pension Calculator does not:

• Access or interface with EPFO member services
• Reflect your actual EPFO account balance
• Calculate EDLI or administration charges
• Account for VPF (Voluntary Provident Fund) separately unless you enter it as part of the wage base
• Calculate EPS pension payable at retirement
• Account for partial withdrawals, scheme certificate transfers or pension commencement

For official EPFO account information, use the EPFO member portal.