If you have been keeping up with financial news, you might have heard about the transition to the Employees’ Pension Scheme (EPS) 2026 under the Code on Social Security, 2020. With any big regulatory shift, it is natural to wonder: Has everything changed?
The good news is that when it comes to your monthly pension, the core framework remains consistent with the previous system. Whether you are just starting your career or planning for retirement, here is a straightforward breakdown of how your EPS pension is calculated.
The Pension Calculation Formula
The method for calculating your monthly pension has not changed under EPS 2026. The formula remains:
Monthly EPS Pension = (Pensionable Salary × Pensionable Service) ÷ 70
Here is what those terms actually mean:
- Pensionable Salary: This is the average monthly salary you earned during the last 60 months before exiting the pension fund.
- Pensionable Service: The total number of years you have contributed to the scheme.
- Wage Ceiling: Unless you opted for a higher pension contribution, calculations are based on the statutory wage ceiling of ₹15,000, even if your actual basic salary plus dearness allowance is higher.
Important Rules to Remember
- Minimum Pension: Every eligible member is assured of a minimum monthly pension of ₹1,000, even if the formula results in a lower amount.
- Weightage for Long Service: If you complete 20 years or more of eligible service, you receive a two-year weightage. For example, 20 years of service is treated as 22 years for calculation purposes, and 25 years is treated as 27 years.
- Eligibility: To be eligible, you must have completed at least 10 years of pensionable service.
Planning Ahead
Understanding your potential pension is a crucial step in retirement planning. While the rules above provide the foundation, remember that individual circumstances can vary. It is always a good practice to consult official EPFO sources or a qualified financial advisor to get precise details tailored to your specific service history and salary records.
Disclaimer: All figures and examples mentioned are illustrative. Please refer to official EPFO guidelines for the most accurate and current information regarding your pension.
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Shreejith is the founder of InfographicStory.com, a hub for visual learning and data storytelling. Dedicated to simplifying complex ideas, he creates infographics that turn facts into insights. Have questions or collaboration ideas? Reach out to him at storyinfographic@gmail.com.