EPF, EPS, VPF and NPS: How Your Retirement Savings Work
Updated 2026-10-30
Quick answer: You contribute 12% of basic + DA to EPF. Your employer also contributes 12%: 8.33% of wages up to ₹25,000 (max ₹2,083 a month, since 17 September 2026) goes to the Employees' Pension Scheme and the rest to EPF. EPF earned 8.25% for FY 2025-26. VPF lets you add more at the same rate; NPS is a separate market-linked pension account.
How EPF interest is credited
Interest is calculated on the monthly running balance at the declared annual rate ÷ 12 and credited to your account once a year. The FY 2025-26 rate of 8.25% was decided by the EPFO board in March 2026 and confirmed by the Finance Ministry in June 2026.
EPS pension formula
Monthly pension = pensionable salary × pensionable service ÷ 70. Pensionable salary is the average of the last 60 months, capped at the wage ceiling (₹25,000 from 17 September 2026; months before that count at ₹15,000) unless you contribute on higher wages. You need 10 years of service; members with 20+ years get 2 years' weightage. The minimum pension is ₹1,000 a month.
VPF vs NPS
VPF earns the EPF rate with EPF withdrawal rules; interest on employee contributions above ₹2.5 lakh a year is taxable. NPS returns are market-linked, and at 60 non-government subscribers must annuitise at least 20% of a corpus above ₹12 lakh (government sector: 40%).
FAQs
Can I stop EPS contributions?
New joiners with wages above the ₹25,000 ceiling (₹15,000 before 17 September 2026) are not covered by EPS, so the full employer share goes to EPF. Existing EPS members cannot opt out.