Most salaried employees in India contribute to two retirement accounts without giving either much thought. The Employees Provident Fund (EPF) comes with the job. The National Pension System (NPS) may come through the employer or be opened independently. Both help build retirement savings over time. Both provide for the subscriber's family/legal heirs after their death.

But the rules around who receives the money and how are quite different between the two. Many employees assume that adding a name as a nominee is enough. In reality, EPF and NPS treat nominees differently, cover different benefits, and involve different claim processes.

This blog explains the key differences between NPS and EPF nominee rules so subscribers can make sure their family actually receives what they are entitled to.

Key Highlights

• EPF and NPS have different nominee rules, even though both are retirement savings accounts.

• EPF nominees are generally limited to family members, while NPS allows up to three nominees, including non-family members.

• EPF provides three benefits after death: PF corpus, EPS family pension, and EDLI insurance.

• EPF nominations should be updated after major life changes such as marriage or having children.

• NPS pays the accumulated corpus as a lump sum to the nominee and does not provide a separate family pension.

• A Will that lists EPF and NPS accounts and aligns nominee details can help reduce confusion and delays for the family.

What Does NPS & EPF Accounts Cover?

Before getting into nominee rules, it helps to understand what each account actually holds.

The EPF account has three parts. 

• The first is the Provident Fund (PF) corpus, which is the accumulated contributions from the employee and employer, plus interest. The current declared interest rate for the financial year 2025-26 is 8.25%. 

• The second is the Employees Pension Scheme (EPS), which provides a monthly pension to the family after the employee's death. 

• The third is the Employees Deposit Linked Insurance (EDLI), which is a life insurance cover that pays a lump sum when the employee dies while in service. The maximum EDLI benefit is Rs 7 lakh.

The NPS account holds the pension corpus built up through contributions. On the subscriber's death, the entire corpus goes to the nominee as a lump sum. There is no separate monthly pension payable to the family under NPS, which is different from the EPS component in EPF.

EPF Nominee Rules

Under the Employees Provident Fund and Miscellaneous Provisions Act, 1952, every member must file a nomination using Form 2. This is now done electronically through the Employees Provident Fund Organisation (EPFO) Member e-Sewa portal as an e-nomination.

Who can be an EPF nominee?

If the employee has a family, the nominee must be a family member. Under EPF rules, the family includes the spouse, children (including adopted children), dependent parents, and the widow and children of a deceased son.

An employee without a family at the time of nomination can nominate anyone. But once the employee gets married or has children, a fresh nomination is required. If a fresh nomination is not filed, the old one becomes void, and the money goes to the legal heirs instead. EPFO has made e-nomination mandatory, and accounts without a valid e-nomination can face delays in claim processing.

What happens when an EPF member dies?

The family may be entitled to three separate benefits, the EPF balance, EPS family pension and EDLI insurance benefit. Each has different eligibility rules and claim requirements.

1. EPF balance

The deceased member's accumulated PF balance, including applicable interest, can be claimed using Form 20. If there is a valid nomination, the amount is generally paid to the nominee. If there is no valid nomination, the PF amount is payable to eligible family members in accordance with EPF rules; if there is no eligible family member, it may be paid to the person legally entitled to it. Additional documentation may be required depending on the circumstances.

2. EPS family pension

The family may also be entitled to a monthly pension under the Employees' Pension Scheme (EPS). The spouse is generally entitled to a widow/widower pension. In addition, up to two children at a time below 25 years of age can receive a children's pension, subject to the EPS rules. A disabled child may have separate lifetime pension eligibility. Form 10-D is used for the monthly pension claim.

3. EDLI insurance benefit

If the member dies while in service, the family may also be entitled to a one-time insurance benefit under the Employees' Deposit Linked Insurance (EDLI) Scheme. The benefit is calculated under the applicable EDLI formula, taking into account factors such as the member's wages and PF balance, and can be up to ₹7 lakh, subject to the scheme's eligibility and calculation rules. There is no separate premium payable by the employee; the scheme is funded through an employer contribution. Form 5-IF is used for the EDLI claim.

EPFO also provides a Composite Claim Form for death cases, covering PF, pension and EDLI claims, and its current Member Portal provides online facilities for death-related claims.

Timelines for processing claims can vary depending on documentation, nomination records, verification and the nature of the claim.

NPS Nominee Rules

The NPS is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). The nomination rules here differ from EPF in several important ways.

Who can be an NPS nominee?

Under NPS, a subscriber can nominate up to three people and decide what percentage of the accumulated pension wealth each nominee should receive. The percentages allocated to all nominees must add up to 100%.

But there is an important condition: if the subscriber has a family, the nomination must generally be made in favour of one or more family members. A nomination in favour of someone outside the family is not valid under the NPS rules.

If the subscriber does not have a family when making the nomination, they can nominate any person or persons. However, if they subsequently acquire a family, that nomination becomes invalid, and a fresh nomination in favour of family members is required.

A minor can also be nominated. In such a case, guardian details have to be provided. PFRDA permits the appointment of a major family member as guardian or another person where there is no major family member.

Nomination is required under NPS, and subscribers can change their nomination any number of times. Nomination-related requests can be made through the applicable online NPS facility or through the subscriber's Point of Presence (PoP).

For more on how nomination works alongside succession and legal heir rights, see AasaanWill's blog on whether a nominee can claim investments without a Will.

What happens when an NPS subscriber dies?

The entire accumulated pension corpus is paid to the nominee or nominees in the proportions specified. There is no annuity or monthly pension for the family. The nominee receives the full amount as a lump sum.

This is different from what happens at retirement, where the subscriber must use at least 40 per cent of the corpus to buy an annuity. On death, that annuity requirement does not apply.

If there is no nominee and no Will, the corpus goes to the legal heirs through the succession process, which involves a legal heir certificate or a succession certificate from a civil court.

The Key Differences at a Glance

EPF and NPS follow different rules on almost every point. The table below shows us a comparison between the two.

Common Mistakes Employees Make

These common mistakes can lead to rejected nominations, delays, or missed benefits for your family.

• Not updating the EPF nomination after marriage or having children. Under EPF, the old nomination becomes invalid once a family exists. A fresh e-Nomination must be filed on the EPFO portal, or the money goes to legal heirs.

• Not checking the percentage split in NPS. If the percentages across nominees do not add up to 100%, the nomination form is rejected. This is a simple error that causes unnecessary delays.

• Not knowing about the EPS pension and EDLI benefit. Many families only claim the PF corpus and miss the monthly widow pension and the EDLI lump sum. All three must be claimed separately using different forms.

• Not checking whether an older PF nomination has been digitised. Older paper nominations may not be on the EPFO system. Employees should log in to the EPFO portal and check their e-Nomination status.

• Not having a Will that records these accounts. A Will that lists NPS and EPF accounts, along with nominee details, helps the family act quickly. AasaanWill's blog on how to build an inventory of your financial assets explains how to do this in a way the family can actually find and use.

How a Will Connects With NPS and EPF

A nominee and a Will serve different purposes.

A nominee is generally the person authorised to receive money from the institution after the account holder's death. But nomination does not necessarily determine who ultimately inherits the money. The Supreme Court has said that, especially in provident fund cases, a nominee may receive the money, but the actual ownership can still be decided by inheritance law.

This is why keeping your nomination and Will aligned is important. A valid nomination can make it easier for the institution to identify the person entitled to receive the funds, while a Will can clearly record your wishes regarding the distribution of assets that form part of your estate.

A Will is particularly useful where there are multiple heirs, complex family circumstances, or different intended beneficiaries, and it can help reduce uncertainty about how your estate should ultimately be distributed.

For NPS, the rules are different from a simple "nominee versus legal heir" framework. Under the current PFRDA regulations, if there is no registered nomination at the time of death, the accumulated pension wealth is paid to the eligible legal heirs/family members in accordance with the applicable rules, using a legal heir certificate issued by the competent state authority or a succession certificate issued by a court, as prescribed.

A Will can therefore be an important part of your overall estate plan, but it should not be presented as an automatic substitute for the nomination and documentation requirements of NPS or EPF.

How AasaanWill Helps?

AasaanWill helps employees and their families plan ahead so retirement savings actually reach the right people. Our team helps with:

• Writing a Will that lists all financial accounts, including NPS and EPF, so the family knows what exists and where

• Explaining how nominees and legal heirs interact so families understand their actual rights

• Helping align nominees across accounts with what the Will says to avoid conflicts

• Advising on what happens when there is no nominee and how to prepare the right documents

• Guiding families where a member has already passed away through the EPF and NPS claim process

The simplest protection any employee can put in place is a Will that records what accounts exist, names an executor, and ensures the nominee details match. AasaanWill can help create that plan today.

Conclusion

EPF and NPS both build retirement savings, but their nomination rules work differently. Under EPF, where a member has a family, the nomination must generally be made in favour of family members. On death, the family may be entitled to three different benefits: the EPF lump-sum balance, EPS family pension, and EDLI insurance benefit, each with its own eligibility and claim rules.

Under NPS, nomination is mandatory, and a subscriber can nominate up to three people and specify the percentage of the accumulated pension wealth payable to each. If the subscriber has a family, the nomination must generally be in favour of one or more family members; if there is no family at the time of nomination, any person or persons may be nominated. Unlike EPS, NPS does not automatically provide a monthly family pension on the subscriber's death. The accumulated NPS wealth is dealt with under the applicable NPS exit rules, and an eligible nominee or family member may use the corpus to purchase an annuity that can provide regular income.

The most common problems come from outdated nominations, benefits the family did not know about, and having no clear estate plan connecting these accounts with the rest of the estate. Checking and updating nominations regularly, filing your e-nomination on the EPFO portal, and writing a Will that covers your broader estate are practical steps every employee should consider. EPFO currently allows members to file and update e-nominations during their service period.

AasaanWill can help you put your estate plan in place today.

Frequently Asked Questions

1. What is the difference between EPF and NPS nominee rules?

EPF limits nominations strictly to family and pays out a lump sum, pension, and insurance, whereas NPS allows up to three nominees with customised percentage splits and uses the fund to buy an annuity. 

2. Can I nominate a non-family member in EPF? 

Only if you have no family at the time of nomination. Once you have a spouse or children, the nominee under EPF must be a family member. If a non-family member is nominated after acquiring a family, that nomination becomes invalid.

3. How many nominees can I have under NPS? 

Up to three nominees. You must specify the percentage of the corpus each nominee receives, and the total must add up to 100 percent.

4. What are the three benefits payable under EPF when a member dies? 

The Provident Fund (PF) lump sum claimed using Form 20. The Employees Pension Scheme (EPS) monthly pension for the spouse and children is claimed using Form 10-D. The Employees Deposit Linked Insurance (EDLI) lump sum of up to Rs 7 lakh was claimed using Form 5-IF. All three must be claimed separately.

5. What is EDLI, and does it require a separate premium? 

EDLI stands for Employees Deposit Linked Insurance. It is a life insurance cover automatically given to all EPF members. The employer pays the contribution, not the employee. The maximum benefit is Rs 7 lakh.

6. What happens to the NPS corpus if there is no nominee? 

It goes to the legal heirs through the succession process. A legal heir certificate or succession certificate from a civil court is required. This takes time, which is why having an updated nomination and a Will is important.

7. Does a Will override a nominee in EPF or NPS? 

A nominee receives the money first but holds it as a trustee for the legal heirs. If a Will names a different person as the beneficiary, the nominee is legally obligated to pass the money to that person.

8. What forms are used to claim EPF benefits after the member's death? 

Form 20 for the PF corpus. Form 10-D for the EPS monthly pension. Form 5-IF for the EDLI insurance benefit. All three can be filed online through the EPFO Member e-Sewa portal.

9. What happens if the EPF nomination is outdated after marriage? 

If a fresh nomination is not filed after marriage, the old nomination becomes void. The money is then distributed among eligible family members under EPF rules, which may not match the member's wishes.

10. How do I update my EPF e-nomination? 

Log in to the Employees Provident Fund Organisation (EPFO) Member e-Sewa portal using your Universal Account Number (UAN). Go to Manage, then e-Nomination. Add family details, assign share percentages, and authenticate using your Aadhaar-linked One Time Password (OTP). No employer approval is needed.

11. Is nomination mandatory for NPS? 

Nomination is mandatory for the Tier 1 NPS account. It is optional for the Tier 2 account. Subscribers can update nominee details at any time through the Central Recordkeeping Agency (CRA) portal or their Point of Presence (PoP).

12. Can a minor be nominated under NPS? 

Yes. If a nominee is a minor, the subscriber must also provide the guardian's details. The guardian will receive the corpus on behalf of the minor until the minor comes of age.

13. What is the EPS family pension, and who receives it? 

EPS stands for Employees Pension Scheme. On the death of an EPF member, the spouse receives a monthly widow pension, and up to two children below 25 years of age receive a monthly children's pension. These are paid separately from the PF corpus.

14. How does a Will help with EPF and NPS claims? 

A Will that lists all financial accounts, including EPF and NPS, tells the family what exists and who it goes to. If the nominee has predeceased the employee or no nomination is on record, a Will with a named executor speeds up the succession process significantly.

15. Can AasaanWill help employees plan for EPF and NPS succession? 

Yes. AasaanWill helps draft a Will that covers retirement accounts, aligns nominee details with legal wishes, and creates a clear record of financial assets. This reduces delays and confusion for the family at a difficult time.

Disclaimer: This article is for general informational purposes only and does not constitute legal advice. The information presented reflects the law as of the date of publication. For advice on your specific situation, please consult a qualified advocate. “Make sure your EPF and NPS savings reach the right people without unnecessary delays. Create a Will with AasaanWill and keep your retirement assets, nominations, and wishes clearly documented."