It is unlikely that the range of benefits offered under EPS is available under any other scheme and EPS with such kind of benefits cannot be compared with pure market-linked annuity scheme.
There is a prevailing notion in the media that the returns in EPF/EPS are low compared to NPS and other market-oriented SIP schemes. This, no doubt, stems from the conventional wisdom that investment in equity market outperforms other investment avenues in the long run. However, a dispassionate analysis of the returns actually achieved by EPFO would show that it fares rather competitively with the returns under NPS and even outscores most of the offering in the NPS basket. It would be essential for comparative purposes to convert the interest earnings of the EPF scheme into an NAV. When this NAV is compared with the declared NAV of various NPS schemes under tier-1 account, it emerges that only the three corporate schemes of NPS has performed better than EPF since May 2009 to September 6, 2013.
In NPS, life cycle approach has been adopted as default during the investment phase. This means that for a member who is below the age of 35 years and does not choose to actively manage his funds, the investments in his case would be governed by the default scheme. This default scheme mandates investment of 50% in equity (E) scheme, 30% in corporate (C) scheme and the balance 20% in government (G) scheme for a person below 35 years of age. The returns when calculated for a member who is below 35, under default scheme of NPS commencing from May 2009 and EPF/EPS for the same period, it is seen that the performance of EPF is better than all the other schemes run by different NPS fund managers. EPF has provided annual returns of 10.05% in comparison to 9.78% of the best performing ICICI Pension Fund Management Company among NPS fund managers.
There is another prevailing notion that the management charges of EPS are high. This is far from the truth, for while EPFO charges 1.10% of the wage from the employer for managing the EPF