Retiring soon? How much higher EPS pension will you get after the wage ceiling hike

The Employees’ Provident Fund (EPF) wage ceiling increased from Rs 15,000 to Rs 25,000 with effect from today (Thursday, September 17, 2026). After this rise, many Employees’ Pension Scheme (EPS) members have been wondering how much their monthly pension will increase under the new wage ceiling.

The biggest beneficiaries of the ceiling hike will be the employees who complete five years of pensionable service under the Rs 25,000 ceiling. Pension is calculated on the basis of pensionable salary, which is determined as average 60-month drawn till retirement. So, employees who are with less than five years of service will get only partial benefit in terms of higher EPS pension.

An EPS subscriber needs 10 years of service to get the EPS pension. Their EPS pension depends on two factors: the average salary of the 60 months preceding the date of exit from EPS membership, and pensionable service, which are years your employer contributes to your EPS pension corpus. If you have completed 20 years of service, the Employees’ Provident Fund Organisation (EPFO) add two years as a bonus for pension calculation. For example, if you have 22 years of service, the EPFO will consider 24 as pensionable service years.


Also Read: 67% rise in EPS pension for these employees as wage ceiling hike to Rs 25,000 gets cabinet’s approval

Why EPS subscribers with less than five years in retirement may get partial benefit of higher pension

Take the case of an EPS subscriber with three years (36 months) left in retirement and drawing a monthly average salary of Rs 15,000 or above for the last two years. For such a subscriber, their pensionable salary for two years, or 24 months, will only be Rs 15,000 due to prevailing wage ceiling. If they continue getting a salary of Rs 25,000 or above for the next three years, their pensionable salary for those 36 months will be calculated at Rs 25,000. So, the 60-month average salary for such an employee’s EPS pension calculation will be Rs 21,000.

Pensionable salary= Average salary of last 60 months= ((Rs 15,000 x 24) + (Rs 25,000 x 36))/60= Rs 21,000

If such an employee has completed 30 years of pensionable service, their estimated monthly EPS pension will be Rs 9,600.

Now compare it with an employee with 30 years of pensionable service and five years left to retirement and who continues drawing a monthly salary of Rs 25,000 or above during that duration.

Also Read: Will this EPF insurance limit rise to Rs 10.50 lakh after EPF wage ceiling hike to Rs 25,000?

Since their EPS contribution for those five years will be done at the Rs 25,000 wage ceiling, their estimated monthly EPS pension will be Rs 11,429, Rs 1,829 more than the previous employee.

Estimated EPS pension at 30 years of service

Pensionable service for EPS pension calculation	Time left in retirement	Pensionable salary	Monthly EPS pension
30	1 year	₹ 17,000	₹ 7,771
30	2 years	₹ 19,000	₹ 8,685
30	3 years	₹ 21,000	₹ 9,600
30	4 years	₹ 23,000	₹ 10,514

Estimated EPS pension at 20 years of service

Pensionable service for EPS pension calculation	Time left in retirement	Pensionable salary	Monthly EPS pension
20	1 year	₹ 17,000	₹ 5,343
20	2 years	₹ 19,000	₹ 5,971
20	3 years	₹ 21,000	₹ 6,600
20	4 years	₹ 23,000	₹ 7,229

Estimated EPS pension at 10 years of service

Pensionable service for EPS pension calculation	Time left in retirement	Pensionable salary	Monthly EPS pension
10	1 year	₹ 17,000	₹ 2,429
10	2 years	₹ 19,000	₹ 2,714
10	3 years	₹ 21,000	₹ 3,000
10	4 years	₹ 23,000	₹ 3,286

How is EPS pension calculated?

Monthly EPS member's pension = Pensionable salary X Pensionable service/70

Assumption for EPS pension calculations

We will calculate the estimated monthly EPS pension for employees with one, two, three and four years left in their retirement. We will calculate their pension assuming their pensionable service years are 10, 20 and 30 years. For 20 and 30 years of pensionable service, their pension will be calculated at 22 and 32 years, respectively.

Here, you can see that at the same pensionable service years, pension amounts are different because of the duration the employee worked under the old and new EPF wage ceilings.

What does the Rs 25,000 wage ceiling mean for EPS subscribers?

Employees from the organised sector earning up to Rs 25,000 monthly salary (basic salary+ dearness allowance) will be mandatorily enrolled on the EPF and the EPS schemes.

The other advantage of a high EPF wage ceiling for EPS subscribers is that if their 60-month average salary preceding the date of exit from EPS membership is equal to or higher than the new wage ceiling, their EPS pension will be calculated at Rs 25,000 pay, instead of the earlier limit of Rs 15,000.

Who gets EPS pension?

After the government’s new wage ceiling decision, employees who have a basic salary and DA of Rs 25,000 or less will also be required to become EPS members in addition to the EPF. However, they will become eligible for pension only after completing 10 years of service.

Most people who were EPS members before September 1, 2014, and who have been contributing to EPS on the basis of the wage ceiling, will be automatic beneficiaries of a higher EPS pension with the current wage ceiling hike.

It is to be noted that 8.33% of the old wage ceiling of Rs 15,000, which is Rs 1,250, was being deducted from their employer contribution towards EPS. This contribution will rise to Rs 2,083, which is 12% of the new wage ceiling of Rs 25,000 once it is notified.

Those employees who had a salary above Rs 15,000 but up to Rs 25,000 could not join EPS after August 31, 2014. However, after the wage ceiling hike, employees with a salary above Rs 15,000 and up to Rs 25,000 will be eligible to join the EPS 2026 scheme.