What is EPS-95?
The Employee Pension Scheme 1995 (EPS-95) is a social security pension managed by the Employees' Provident Fund Organisation (EPFO). It provides a monthly pension to EPF members after they complete 10 years of eligible service and reach 58 years of age.
Unlike EPF, where both employer and employee contribute, EPS receives only the employer's share. Out of the employer's 12% contribution, 8.33% (capped at ₹15,000 salary) goes to EPS. The Central Government adds a 1.16% subsidy. The employee's entire 12% share goes to the EPF corpus, not to EPS.
Key fact: As of 2025, approximately 78 lakh pensioners receive monthly pension under EPS-95 through EPFO's Centralised Pension Payment System (CPPS). The scheme covers employees in establishments with 20 or more workers.
Attendo (formerly Petpooja Payroll) automatically splits employer contributions between EPF and EPS, so businesses do not need to calculate the 8.33% allocation manually. The statutory compliance module handles this for all 30,000+ businesses on the platform. You can check contribution details using the PF interest calculator.
EPS Pension Formula
EPFO uses a fixed formula to calculate the monthly pension amount under EPS-95. The formula is straightforward, but certain rules around service rounding and bonuses affect the final number.
Monthly Pension = (Pensionable Salary × Pensionable Service) ÷ 70
- ✓Pensionable Salary is the average of Basic + Dearness Allowance for the last 60 months (5 years) of service. It is capped at ₹15,000/month unless you opted for higher pension on actual salary. Use the DA calculator to check your current DA component
- ✓Pensionable Service is the total completed years of EPS membership. If the remaining months are 6 or more, the service rounds up to the next full year. Maximum: 35 years. Track your total service with the work experience calculator
- ✓70 is the fixed divisor prescribed by the EPS-95 scheme rules. It does not change regardless of salary or service length
- ✓20-year bonus: If pensionable service is 20 years or more, EPFO adds 2 extra years as weightage. So 25 actual years become 27 in the formula
- ✓Minimum pension: The floor is ₹1,000/month (since September 2014). If the formula gives a lower amount, ₹1,000 is paid instead
Example: An employee with 30 years of service and ₹15,000 pensionable salary gets: Service = 30 + 2 (bonus) = 32 years. Pension = (15,000 × 32) / 70 = ₹6,857/month.
Early Pension Reduction Table
If you leave service after 10 years but before turning 58, you can claim early pension starting at age 50. The pension amount reduces by 4% for each year you are below 58. Here is the reduction schedule for an employee with ₹15,000 pensionable salary and 30 years of service (32 years with bonus).
| Retirement Age |
Years Below 58 |
Reduction |
Monthly Pension |
| 58 | 0 | 0% | ₹6,857 |
| 57 | 1 | 4% | ₹6,583 |
| 56 | 2 | 8% | ₹6,309 |
| 55 | 3 | 12% | ₹6,034 |
| 54 | 4 | 16% | ₹5,760 |
| 53 | 5 | 20% | ₹5,486 |
| 52 | 6 | 24% | ₹5,211 |
| 51 | 7 | 28% | ₹4,937 |
| 50 | 8 | 32% | ₹4,663 |
The same logic works in reverse for deferred pension. If you defer collecting your pension beyond 58 (up to age 60), your amount increases by 4% per year of deferral. For full details on the early pension rules, refer to the EPFO official website.
Higher Pension Option: Supreme Court Ruling
In November 2022, the Supreme Court of India ruled that EPF members who were contributing before 1 September 2014 could opt for pension based on their actual salary instead of the ₹15,000 cap. This is called the "higher pension" option.
- ✓Who can opt: Employees who were EPF members before 1 September 2014 and did not previously exercise the joint option for higher pension. See the EPFO website for official notifications
- ✓How it works: The employer contributes 8.33% of the actual salary (not capped at ₹15,000) to EPS. The difference is adjusted from the EPF balance
- ✓Applications received: EPFO received 17.49 lakh applications by the deadline. Processing and validation are ongoing
- ✓Impact on pension: For employees earning ₹50,000/month, the pension could increase from ₹6,857 to approximately ₹22,857 (with 32 years of service)
Toggle it in the calculator: Enable the "Higher Pension Option" toggle above to see your pension estimate based on actual salary instead of the ₹15,000 cap. This gives you a side-by-side comparison of the two scenarios.
EPS vs EPF: Key Differences
EPS and EPF are both managed by EPFO but serve completely different purposes. EPF is a savings corpus you can withdraw as a lump sum. EPS provides a monthly pension for life. Here is how they compare.
- ✓EPF (Provident Fund): A defined contribution savings account. Employee contributes 12% of Basic + DA. Employer contributes 3.67%. Earns interest (8.25% for FY 2024-25). Withdrawable as a lump sum at retirement or partially during service
- ✓EPS (Pension Scheme): A defined benefit pension. Employee contributes nothing directly. Employer contributes 8.33% (capped at ₹15,000). No interest earned. Pays a monthly pension for life after age 58 with 10+ years of service
- ✓Salary cap: EPF has no salary cap for contributions. EPS contributions are capped at ₹15,000/month (₹1,250/month to EPS) unless higher pension is opted
- ✓Tax treatment: EPF withdrawal is tax-free after 5 years of continuous service. EPS pension is taxable as salary income under the Income Tax Act
- ✓Less than 10 years: If you leave before completing 10 years, you can withdraw from EPF but cannot claim EPS pension. You can take a lump-sum withdrawal benefit or carry forward service via a Scheme Certificate
Attendo tracks both EPF and EPS contributions automatically for every employee. The PF interest calculator can help you estimate the EPF corpus separately.
Types of Pension Under EPS-95
EPS-95 provides several types of pension depending on the member's circumstances. The normal pension is the most common, but family pension, disability pension, and withdrawal benefits are also available.
- ✓Normal/Superannuation Pension: Full formula-based pension at age 58 with 10+ years of service
- ✓Early Pension: Available from age 50 with 10+ years of service. Reduced by 4% for each year below 58
- ✓Deferred Pension: If you defer claiming pension beyond 58, you receive an extra 4% per year up to age 60
- ✓Widow/Widower Pension: Spouse of a deceased member receives approximately 50% of the member's pension, with a minimum of ₹1,000/month
- ✓Children Pension: Up to 2 children of a deceased member receive 25% of the widow pension each, until age 25
- ✓Orphan Pension: If both parents are deceased, each child receives 75% of the widow pension amount
- ✓Disability Pension: For permanent total disablement during service. No minimum service required
- ✓Withdrawal Benefit: If service is less than 10 years, the member receives a lump sum based on Table D of the scheme (not a pension)
Common Mistakes in EPS Pension Calculation
These are the errors that employees and HR teams commonly make when estimating pension under EPS-95. Avoiding them will give you a more accurate picture of your expected pension amount.
- ✓Using gross salary instead of Basic + DA: Only Basic + Dearness Allowance counts for EPS. HRA, special allowances, and bonuses are excluded from pensionable salary
- ✓Forgetting the ₹15,000 cap: Unless you have opted for higher pension, the pensionable salary is capped at ₹15,000 regardless of your actual earnings. Many employees with salaries above this assume a higher pension than they will actually receive
- ✓Ignoring the 6-month rounding rule: 24 years and 7 months counts as 25 years. Skipping this rounding understates the pension by one year's worth
- ✓Missing the 20-year bonus: If you have 20 or more years of service, EPFO adds 2 years as weightage. This bonus alone can increase pension by over ₹400/month at the ₹15,000 cap
- ✓Not accounting for early pension reduction: Retiring at 50 means a 32% reduction from the full pension amount. Many people underestimate how much this cuts into their retirement income. Plan your exit using the salary per day calculator alongside pension estimates
- ✓Assuming EPS works like EPF: EPF is a savings account that earns interest. EPS is a fixed-formula pension. There is no "balance" in EPS, so comparing the two directly leads to incorrect expectations
