What Is EPS Pension?
The Employees' Pension Scheme (EPS) is a government-backed pension scheme for salaried employees covered under EPF. A portion of your employer's EPF contribution—8.33% of Basic+DA (capped at ₹15,000)—goes to EPS. After retirement, EPS provides a fixed monthly pension for life. Unlike EPF, which gives a lump sum, EPS gives guaranteed income. To be eligible for pension (not lump sum), you need at least 10 years of service. This guide explains the EPS formula, pensionable salary, service rules, and how to estimate your pension using our EPS Calculator.
Key Takeaways
- Formula: (Pensionable salary × Pensionable service) ÷ 70
- 10 years minimum: For monthly pension; before 10 yr = lump sum only
- Pensionable salary: Avg of last 60 months, capped (₹15K old formula)
- Max pension: ~₹7,500 (old); new rules may differ. Verify with EPFO
- Use EPS Calculator: Estimate pension based on service and salary
EPS Pension Calculation Formula
Understanding Pensionable Salary
Pensionable salary is the average of the last 60 months' (5 years) salary before exit. For members who joined before September 2014, it was capped at ₹15,000. For members who joined after September 2014, a higher cap applies (e.g. ₹15,000 for contribution, but pensionable salary calculation may differ—check EPFO for latest). Only Basic + DA are considered; HRA and other allowances are excluded. If your last 60 months' average Basic+DA is ₹50,000 but the cap is ₹15,000, pensionable salary for the formula is ₹15,000.
Understanding Pensionable Service
Pensionable service is the total years of service under EPS. It can be with one or multiple employers—if you transferred EPF when changing jobs, the total period counts. Part years: if you have 30 years and 6 months, it's 31 years (more than 6 months rounds up). If 30 years and 4 months, it's 30 years. The maximum pensionable service is typically 35 years for the formula. Service before joining EPS (pre-1995) may have different rules; check with EPFO.
Worked Example
📊 Pensionable salary ₹15,000 (capped), 25 years service
Before 10 Years: Lump Sum, Not Pension
If you exit before completing 10 years of EPS service, you get a lump sum withdrawal, not a monthly pension. The employer's EPS contribution plus interest is paid to you. So job-hoppers who never complete 10 years with EPF across employers won't get EPS pension—only lump sum at each exit. Plan accordingly: if you're at 8 years and considering a switch, staying 2 more years can qualify you for pension from that employer when you eventually retire.
Factors That Affect EPS Pension
- Length of service: More years = higher pension. Each year adds (pensionable salary/70)
- Pensionable salary: Higher last-drawn Basic+DA (subject to cap) = higher pension
- Cap: Old formula capped at ₹15,000; limits max pension to ~₹7,500
- Early exit (50–58): Reduced pension if you opt for early withdrawal; ~4% cut per year before 58
EPS vs EPF: How They Work Together
EPF gives you a lump sum at retirement; EPS gives you a monthly pension. Both come from your employer's 12% contribution—8.33% to EPS, the rest to EPF. At retirement, you get EPF lump sum + EPS monthly pension. Use EPF for lump-sum needs (e.g. repaying loan, corpus); use EPS for regular income. Combine with NPS, PPF, and other savings for a complete retirement plan. Use our Retirement Planner to model EPF + EPS + other sources.
Use the EPS Pension Calculator
Use our EPS Calculator to estimate your monthly pension. Enter pensionable salary (or current Basic+DA if close to retirement), years of service, and expected retirement date. The calculator applies the formula and shows approximate pension. Verify with EPFO for exact figures.
Disclaimer
EPS rules have changed over time. Pensionable salary cap and formula vary by joining date. Verify with EPFO or employer for your case.