EPS pension and the higher pension option
Updated 11 October 2026
The Employees' Pension Scheme (EPS), run by EPFO, pays a monthly pension to private-sector employees with at least 10 years of EPS service, normally from age 58. The formula is pensionable salary × pensionable service ÷ 70, with pensionable salary capped at the wage ceiling, which rose from ₹15,000 to ₹25,000 a month on 17 September 2026. A separate higher pension option, opened by the Supreme Court in 2022, let some members take pension on their actual salary.
Where the EPS money comes from
You contribute 12% of basic pay plus DA, and all of it stays in your PF account. Your employer also pays 12%, but 8.33% of wages up to the ceiling goes to EPS and only the rest to EPF. The central government adds 1.16% of wages up to the ceiling.
| Monthly amount at the ceiling | Up to 16 Sep 2026 (₹15,000) | From 17 Sep 2026 (₹25,000) |
|---|---|---|
| Employer share to EPS (8.33%) | ₹1,250 | ₹2,083 |
| Employer share to EPF (3.67%) | ₹550 | ₹917 |
| Employee share to EPF (12%) | ₹1,800 | ₹3,000 |
The new ceiling was notified on 17 September 2026 under the Code on Social Security. EPS also has a new legal base: from 29 June 2026, the Employees' Pension Scheme, 2026 replaced EPS-95 and the 1971 family pension scheme, and existing members and pensioners moved across automatically. Someone whose wages are above the ceiling when they first join is not enrolled in EPS, and the employer's whole 12% goes to EPF.
The pension formula
- Pensionable salary: the average monthly salary of the last 60 months before you exit, counted at the wage ceiling that applied in each period.
- Pensionable service: your years of EPS membership. With 20 years or more, two years of weightage are added.
- Pension: pensionable salary × pensionable service ÷ 70. Where different ceilings applied during your career (₹6,500 before September 2014, ₹15,000 until September 2026, ₹25,000 now), the pension is worked out proportionately for each period.
- Age: full pension at 58. You can draw early pension from 50, reduced by 4% for each year before 58, or defer to 60 and get 4% more for each year.
- Minimum: ₹1,000 a month. EPS 2026 kept this figure; proposals to raise it have been discussed but not notified.
If you leave before 10 years
You do not get a monthly pension, but you can take a lump-sum withdrawal benefit based on your service, or a scheme certificate that carries the service to your next job. Under EPS 2026, the withdrawal benefit is paid only after 36 months from the date your last contribution was due, or at superannuation if that comes first. Transferring your account when you change jobs is usually better; see EPF explained.
Higher pension: what the Supreme Court allowed
Before 2014, some employees and employers paid EPS contributions on actual salary above the ceiling. In its judgment of 4 November 2022, the Supreme Court gave members who were in service on 1 September 2014, and had contributed on higher salary, a chance to opt for pension on actual salary. EPFO took applications until 11 July 2023, and employers had until 31 January 2025 to upload wage details.
Successful applicants move the extra 8.33% contributions on salary above the ceiling, with interest, from their EPF balance to EPS, and their pension is then worked out on the higher pensionable salary. EPS 2026 continues the option: for these members the employer's EPS share includes an extra 1.16% of wages above the ceiling, so 9.49% in all goes to the pension fund. According to a Lok Sabha reply of July 2025, EPFO received about 15.24 lakh applications, rejected about 11 lakh and issued about 4 lakh demand letters. The window has closed, and there is no new option.
Family pension, disability and claims
If a member or pensioner dies, the spouse gets a widow or widower pension and children get children's pension; orphans get a higher rate. A member who becomes permanently and totally disabled in service gets disability pension without the 10-year condition. EPS 2026 requires complete pension claims to be settled within 20 days. Pensioners can give their life certificate at any time of the year, and it stays valid for 12 months. Your pension order is explained in our PPO guide, the wider wage changes in Labour Codes and your salary, and official details are on the EPFO website.