EPF wage ceiling: How EPS pension can rise by 67%
In an important decision that can impact a large number of employees from the organised sector, the central government today (Wednesday, September 16, 2026) raised the monthly wage ceiling for Employees' Provident Fund (EPF) coverage to Rs 25,000 from Rs 15,000.
In a cabinet briefing today, Union minister Ashwini Vaishnaw said that the government would spend around Rs 11,339 crore every year as part of the move, which is aimed at widening social security coverage for employees.
This came as a significant change since the EPF wage ceiling of Rs 15,000 had been in effect since September 1, 2014. The change will bring a lot of new employees into the coverage of the EPF and Employees’ Pension Scheme (EPS) as those earning up to Rs 25,000 in basic pay and dearness allowance will be required to join both schemes.
What can also be an extraordinary thing for many is that the EPS pension for those under the coverage may also rise up to 67%.
The rule for the EPS pension will be conditional on employees completing up to 5 years of service after the new wage ceiling of Rs 25,000 comes into effect. So, if you do not complete five years under the new wage ceiling and retire, your pensionable salary will not be Rs 25,000, but less. The more the number of years spent under the new wage ceiling, higher will be your pension. So, the maximum benefit of this new ceiling will be for those employees who complete 5 years under the new wage ceiling.
Who gets EPS pension?
After the government’s new wage ceiling decision, employees with a basic salary and DA of up to Rs 25,000 will be required to become EPS members. However, they will become eligible for pension after completing at least 10 years of service.
As per the existing rule, any new employee joining an establishment from September 1, 2014, and drawing a basic wage of more than Rs 15,000 per month couldn’t get membership of the EPS pension fund.
How is EPS pension calculated?
As per the EPS Pension Scheme 2026, the EPS calculation formula is as follows-
Monthly EPS pension = (Pensionable salary × pensionable service) ÷ 70
Here, pensionable salary is the average monthly salary (basic pay+dearness allowance) drawn during the last 60 months before exiting the pension fund.
In this write-up, we will calculate the monthly EPS pension based on the wage ceilings of Rs 15,000 and Rs 25,000 for service periods ranging from 10 to 30 years. We will calculate the estimated additional pension that many EPS subscribers can get under the Rs 25,000 wage ceiling.
According to the Employees’ Provident Fund Organisation (EPFO) rules, if an employee has 20 or more years of service, they get a 2-year bonus. It means that if someone has completed 20 years of service, their service years for EPS pension calculation will be counted as 22 years. Similarly, if they have 25 years of service, it will be counted as 27. At 30 years of service, years of service will be calculated as 32.
30 years of eligible service- Know your EPS pension
25 years of eligible service- Know your EPS pension
20 years of eligible service- Know your EPS pension
15 years of eligible service- Know your EPS pension
10 years of eligible service- Know your EPS pension
In a cabinet briefing today, Union minister Ashwini Vaishnaw said that the government would spend around Rs 11,339 crore every year as part of the move, which is aimed at widening social security coverage for employees.
This came as a significant change since the EPF wage ceiling of Rs 15,000 had been in effect since September 1, 2014. The change will bring a lot of new employees into the coverage of the EPF and Employees’ Pension Scheme (EPS) as those earning up to Rs 25,000 in basic pay and dearness allowance will be required to join both schemes.
What can also be an extraordinary thing for many is that the EPS pension for those under the coverage may also rise up to 67%.
The rule for the EPS pension will be conditional on employees completing up to 5 years of service after the new wage ceiling of Rs 25,000 comes into effect. So, if you do not complete five years under the new wage ceiling and retire, your pensionable salary will not be Rs 25,000, but less. The more the number of years spent under the new wage ceiling, higher will be your pension. So, the maximum benefit of this new ceiling will be for those employees who complete 5 years under the new wage ceiling.
Who gets EPS pension?
After the government’s new wage ceiling decision, employees with a basic salary and DA of up to Rs 25,000 will be required to become EPS members. However, they will become eligible for pension after completing at least 10 years of service.
As per the existing rule, any new employee joining an establishment from September 1, 2014, and drawing a basic wage of more than Rs 15,000 per month couldn’t get membership of the EPS pension fund.
How is EPS pension calculated?
As per the EPS Pension Scheme 2026, the EPS calculation formula is as follows-
Monthly EPS pension = (Pensionable salary × pensionable service) ÷ 70
Here, pensionable salary is the average monthly salary (basic pay+dearness allowance) drawn during the last 60 months before exiting the pension fund.
In this write-up, we will calculate the monthly EPS pension based on the wage ceilings of Rs 15,000 and Rs 25,000 for service periods ranging from 10 to 30 years. We will calculate the estimated additional pension that many EPS subscribers can get under the Rs 25,000 wage ceiling.
According to the Employees’ Provident Fund Organisation (EPFO) rules, if an employee has 20 or more years of service, they get a 2-year bonus. It means that if someone has completed 20 years of service, their service years for EPS pension calculation will be counted as 22 years. Similarly, if they have 25 years of service, it will be counted as 27. At 30 years of service, years of service will be calculated as 32.
30 years of eligible service- Know your EPS pension
25 years of eligible service- Know your EPS pension
20 years of eligible service- Know your EPS pension
15 years of eligible service- Know your EPS pension
10 years of eligible service- Know your EPS pension
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