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Employees’ Pension Scheme (EPS): Know Eligibility, Calculation & Formula
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All you need to know about the Employees’ Pension Scheme (EPS)

After retirement, everyone should try to create a continuous source of income so that they can lead a healthy lifestyle without compromising their financial status. A retirement fund will help you to enjoy your life in a stress-free way. Given the prominence of a retirement fund, the Employees’ Provident Fund Organization (EPFO) launched the Employee Provident Fund (EPF) Scheme. In 1995, the Employee Pension Scheme (EPS) was also introduced to ensure that every salaried citizen will receive a lifelong pension after their retirement. EPS full form is an employee pension scheme that offers a pension to employees (working in the organized sector) after their retirement at the age of 58 years.

What is EPS?

The Employee Pension Scheme (EPS) was launched to help employees in the organized sector. All eligible employees for Employees Provident Fund (EPF) scheme will also be eligible for EPS.

Eligibility Criteria for EPS

Now, you have an adequate idea regarding what is an employee pension scheme. But let’s take a look at the eligibility criteria for EPS.

  • The person should be a member of EPFO
  • The person must have finished 10 years of service
  • The age of the person should be above 58 years
  • The person can also withdraw his/her EPS at a reduced rate from the age of 50 years
  • After 2 years, the person will get a pension at an additional rate of 4% for each year


How to calculate EPS?

Suppose you are pondering how much pension you will receive under the Employee Pension Scheme. In that case, you can easily make your EPS calculation based on the period you participated in the EPS scheme. This is because your employee pension scheme calculation goes as per the EPS formula.

Calculation 1: If you have joined the EPS scheme before 16th November 1995

If you joined employment before 16th November 1995 and became an active member of the scheme, your pension will be calculated based on your salary and the number of service years you have completed. The pension amount will be fixed.

Completed years of service Monthly pension if the salary is up to INR 2500/month Monthly pension if the salary is above INR 2500/month
10 years Rs. 80 Rs. 85
11-15 years Rs. 95 Rs. 105
15-20 years Rs. 120 Rs. 135
More than 20 years Rs. 150 Rs. 170

 Calculation 2: If you have joined the EPS scheme after 16th November 1995

If you have joined the scheme after 16th November 1995, then your monthly pension amount would not be the same as the previous one. It would be calculated based on the below-mentioned formula. Amount of monthly pension = (pensionable salary X pensionable service) / 70

Let’s understand the concept of pensionable salary and pensionable service.

Pensionable Salary

The monthly pensionable salary portrays the average monthly salary in the last 12 months of exiting the Employee Pension Scheme. The monthly pensionable maximum wage would be restricted to Rs 15,000 so that the employer’s contribution doesn’t surpass Rs 1250 (8.33% of Rs 15,000 is Rs 1250). If a person didn’t get a salary for a few days, the proportionate salary amount of those days would be added to the monthly income while calculating the average.

For example, you joined your office on the 15th of a particular month, and thus, you received only half a month’s salary. But while considering your pensionable salary, the full months’ salary would be calculated.

Pensionable Service

Your pensionable service is the entire service period for which you have worked. If you have changed your jobs, to get the pensionable service period, the completed duration at each employer would be added. The total service duration would be rounded off to the nearest years. If you worked for 12 years and 4 months, the pensionable service would be considered for 12 years. But, if the duration is 12 years 6 months or above, the pensionable service would be 13 years.

If you have worked for 20 or more years under your service belt, then an additional two years would be added to the service period. But if you have not completed 10 years of service and withdraw the entire EPS corpus fund while changing the job, the EPS contribution would become zero.

How to withdraw pension contributions in EPS?

If a person has completed less than 10 years

A person can withdraw his EPS amount if he/she hasn’t completed 10 years of service. But the employee can’t draw the amount if he is working and has not finished 10 years of service. If a person quits the organization, then only he can withdraw the EPS amount before joining a new organization.

By visiting the EPFO pension portal and claiming Form 10C, a person can withdraw the EPS amount. A person should have an employee pension scheme login ID, and KYC details should be linked to this ID to withdraw the fund.

If a person has worked for more than 10 years

A person can’t withdraw his EPS fund if he has worked for more than 10 years. But by filling the FORM 10C, an individual can apply for a scheme certificate.

Employees’ pension scheme benefits

  • If you are employed, then you must go for this EPS scheme
  • Apart from offering a pension to you, the EPS scheme ensures that your spouse and children will receive a pension in the case of your untimely death.
  • This plan offers you a pension for lifelong so that you don’t need to compromise with your financial security in your old age
  • The employer’s contribution is completely tax-free for you
  • If you opt for any other retirement investment scheme, you have to invest a lot of money to create a pension. But, for the EPS scheme, your company and the Government play an imperative role in creating a corpus for pension payments in your old age.


If you are a salaried employee, you will receive pensions after your retirement under this EPS scheme. The scheme embraces you with a lifelong pension and also offers financial security to your family members in the case of your untimely death.

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