How the EPS 1995 pension formula works
The Employees’ Pension Scheme 1995 switched to a contribution-based pension formula after the September 2014 amendment (GSR 571(E)). For anyone who joined EPS on or after 1 September 2014 — or had service interrupted after that date — the monthly pension is:
Monthly Pension = (Pensionable Salary × Pensionable Service) / 70
Both inputs have hard caps imposed by EPFO rules:
| Variable | Rule | Effective cap |
|---|---|---|
| Pensionable salary | Avg of last 60 months’ basic+DA | ₹15,000/month (wage ceiling) |
| Pensionable service | Total EPS membership years | 35 years maximum |
| Minimum pension | EPFO minimum pension notification | ₹1,000/month |
At the ceiling values, the maximum monthly pension works out to (15,000 × 35) / 70 = ₹7,500/month.
Funding: where does the EPS money come from?
EPS is funded entirely by the employer’s 8.33% contribution on basic+DA (capped at ₹1,250/month). The employee does not contribute directly to EPS. This is in contrast to EPF where both employee and employer build a corpus. EPFO pools all EPS contributions and pays defined pensions from the pool — it is not an individual account balance.
Eligibility conditions
- Minimum service: 10 years of pensionable service (continuous or through scheme certificates from previous employers)
- Normal retirement age: 58 years (full pension)
- Early pension: Available from age 50, reduced by 4% per year before 58
- <10 years service: No monthly pension — you may withdraw the EPS accumulation via Form 10C
If you have changed employers, request a Scheme Certificate (Form 10C option “scheme certificate”) from each previous employer to carry forward your EPS membership years.
Tax treatment of EPS pension
EPS pension is taxable as salary income — it is not exempt like EPF maturity. The standard deduction applies. If you have other income sources, model the combined tax liability using the Income Tax Calculator.
Bridges
- EPF Calculator — see the EPF corpus that accumulates alongside your EPS pension
- PF Calculator — same EPF corpus calculation under the colloquial PF framing
- Income Tax Calculator — model the tax on your EPS pension income