EPS vs NPS

Planning for retirement is one of the most important financial decisions you’ll make in your working life. In India, two widely discussed retirement schemes are the Employee Pension Scheme (EPS) and the National Pension System (NPS). While both aim to provide income security after retirement, they differ significantly in structure, flexibility, returns, and risk.

Understanding how EPS and NPS work—and where they fall short—can help you decide what suits your long-term goals. Many investors also complement these schemes with Bajaj Finance Fixed Deposits, which offer predictable returns, flexibility, and peace of mind while building a retirement buffer. Open FD. 

When choosing a retirement savings plan, understanding how EPS and NPS differ is crucial. Here’s a simplified comparison to help you evaluate both options.

1. Contribution

• EPS: The employer contributes 8.33% of the employee’s salary (basic + DA). Employees do not contribute directly.
• NPS: Contributions can be made by both employee and employer. You can start with as little as ₹1,000 annually, with no upper limit.

2. Returns

• EPS: Offers fixed, formula-based pension payouts.
• NPS: Market-linked returns that depend on equity and debt performance, typically ranging between 8–10% p.a., but not guaranteed.

3. Pension Calculation

• EPS: Based on average salary of the last 60 months and years of service.
• NPS: Depends on the final corpus and annuity purchased at retirement.

4. Withdrawal

• EPS: Pension starts at 58. Early pension is allowed from 50 with reduced payouts.
• NPS: Up to 60% can be withdrawn as a lump sum at 60; the rest must be used to buy an annuity.

Liquidity advantage: With Bajaj Finance FD, you can choose monthly, quarterly, annual, or cumulative payouts—helpful for creating a regular income even before retirement. Check FD rates as per the chosen payout option and tenure. 

5. Tax Benefits

• EPS: Pension income is taxable as per slab.
• NPS: Contributions qualify for deductions under Sections 80C and 80CCD; 60% withdrawal is tax-free.

6. Flexibility

• EPS: Limited flexibility.
• NPS: High flexibility in contribution amounts and asset allocation.

7. Survivor Benefits

• EPS: Pension benefits extend to spouse and children.
• NPS: The accumulated corpus is paid to the nominee.

8. Portability

• EPS: Restricted to EPF-covered employment.
• NPS: Fully portable across jobs and locations.

9. Risk and Return Profile

• EPS: Low risk, predictable pension.
• NPS: Higher risk due to market exposure.

Risk-balancer: Pairing NPS with AAA/Stable-rated Bajaj Finance Fixed Deposits (CRISIL & ICRA) helps balance market volatility with capital protection. Book FD.

Eligibility for NPS

• Resident Indian, NRI, or OCI
• Age between 18 and 70 (extendable up to 75)

Eligibility for EPS

• Salary (basic + DA) up to Rs. 15,000
• Minimum 10 years of service
• Pension payable from age 58

The right choice depends on your career path, risk appetite, and retirement expectations.

1. Employment status

• Salaried employees in EPF-covered organisations automatically benefit from EPS.
• Self-employed professionals and private-sector employees often prefer NPS.

2. Risk appetite

• EPS suits conservative investors.
• NPS suits investors comfortable with market-linked fluctuations.

Smart strategy: Many retirees park a portion of their corpus in Bajaj Finance FD to ensure steady income regardless of market cycles. Check FD rates. 

3. Retirement goals

• EPS offers predictable pension income.
• NPS offers growth and flexibility but depends on annuity rates at retirement.

4. Tax planning

• NPS offers higher tax deductions.
• FDs focus on post-tax income stability rather than tax benefits.

5. Flexibility and portability

• NPS wins on portability.
• FDs win on simplicity and liquidity.

EPS and NPS both play important roles in India’s retirement ecosystem. EPS provides stability for organised-sector employees, while NPS offers growth potential and flexibility for long-term planners. However, neither guarantees complete financial comfort on its own.

That’s why many investors complement these schemes with Bajaj Finance Fixed Deposits—to lock in assured returns, enjoy flexible payout options, and build a dependable retirement income layer. A balanced retirement plan isn’t about choosing one product—it’s about combining growth, safety, and predictability. Open FD account.