Higher EPS-95 pension: Government clarifies rule for employees of exempted, unexempted establishments

Most employees contribute to the Employees’ Pension Scheme (EPS) on the basis of a wage cap of Rs 15,000, but some choose to contribute according to their actual basic salary. On Thursday (August 6, 2026), the matter of the uniform implementation of higher pension under the EPS scheme came up for discussion in the Rajya Sabha. Ajeet Madhavrao Gopchade, MP, asked whether the government has considered the Madras High Court ruling from July 9, 2026, along with previous Supreme Court rulings regarding the uniform implementation of higher pension for employees in both exempted and unexempted establishments.

Gopchade was referring to a recent decision by the Madurai bench of the Madras High Court that reaffirmed the rights of employees of exempted establishments to avail higher pension benefits.

The ruling was important for both working and retired employees of exempted establishments who wanted to choose a higher pension based on their actual wages.


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Additionally, Gopchade also referred to a 2022 Supreme Court decision where the apex court had upheld the right of existing employees to opt for higher pension by contributing to the EPS on a higher/uncapped salary.

What did the government say on uniformity of higher pension for exempted and unexempted establishments?

The government said that it had taken note of the July 9, 2026 judgment of the Madras High Court (Madurai Bench), regarding higher pension under EPS, 1995, for employees of exempted establishments.

The government further said that it had also examined the implementation of the Supreme Court’s order in the Sunil Kumar B. & Others case in a time-bound manner.

The government said that an online facility was provided for EPS subscribers opting for higher pension and applications for validation of joint options, which was also processed in accordance with the applicable provisions.

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Clarifying its position, the government said that the November 2022 higher pension judgement has been implemented uniformly for all exempted and unexempted establishments.

What is a higher EPS-95 pension?

The higher EPS pension scheme is an option provided by the Employees' Provident Fund Organisation (EPFO) to EPS subscribers. The scheme is not limited to the standard wage cap of Rs 15,000 for EPS contributions and allows eligible employees to contribute 8.33% of their actual basic salary and dearness allowance toward their pension.

A higher contribution based on actual basic salary allows an employee to be eligible for higher pension as pension calculations take into account the average pensionable salary of the last 60 months.

Any higher contribution can result in a significantly higher monthly payout to EPS subscribers after retirement.

What is Employees' Pension Scheme-95 (EPS-95)?

The Employees' Pension Scheme, 1995, provides pensionary benefits to eligible employees of establishments covered under the Act. The scheme ensures a monthly pension on superannuation, early retirement, permanent disability, and also offers family pension in case of the EPS member’s demise.

Employers contribute 8.33% of the basic pay of the employee while the central government contributes 1.16% (subject to wage ceiling) towards the EPS pension fund. Members with a minimum service of 10 years are entitled to get pension under the EPS scheme after retiring at the age of 58. Members with a service period of less than 10 years may opt for withdrawal benefits of the EPS scheme.

However, at present, the EPS-2026 scheme has replaced the EPS-95 scheme.

What are the exempted and unexempted establishments?

An EPF-exempted establishment is an employer entity that has set up a private provident fund trust for the coverage of its employees and has obtained exemption under Section 17 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (Provident Fund Act).

Unexempted establishments, on the other hand, are organisations that do not have an approved exemption from the EPFO. Such establishments have to mandatorily comply with the EPF regulations outlined by the EPFO.