Payroll & statutory · Updated October 2026
The Employees’ Pension Scheme, or EPS, is the pension half of your provident fund. When your employer pays its 12% EPF contribution, a slice of that, not your own contribution, is carved out and paid into EPS to fund a monthly pension from age 58. Since 29 June 2026 it runs as the Employees’ Pension Scheme, 2026, which replaced EPS 1995, under the EPFO alongside EPF and EDLI.
8.33% of wages goes to EPS, but only on wages up to the statutory wage ceiling, which rose from Rs 15,000 to Rs 25,000 a month on 17 September 2026. So the EPS contribution is capped at 8.33% of Rs 25,000, about Rs 2,083 a month, for most members (it was Rs 1,250 at the old ceiling). Whatever is left of the employer’s 12% after that goes into the EPF balance instead. Your own 12% never touches EPS; it all sits in EPF.
| Employer contribution on wages of Rs 25,000 or more | Amount |
|---|---|
| To EPS | Rs 2,083 |
| To EPF (12% of wage minus Rs 2,083) | balance |
EPS pays a monthly pension once you turn 58, provided you have at least 10 years of pensionable service. The broad formula is pensionable salary multiplied by pensionable service, divided by 70. Pensionable salary is capped at the wage ceiling: Rs 15,000 for service up to September 2026, with Rs 25,000 expected to apply after that once the detailed pension rules are confirmed. Either way the pension for most private-sector members is modest, which is why EPS is best thought of as a floor rather than a retirement plan on its own. Members with fewer than 10 years of service can withdraw the EPS amount instead, using a withdrawal-benefit table.
Only if you have less than 10 years of total service and are not going to continue. With 10 or more years, the amount is locked in for a pension and cannot be withdrawn as a lump sum.
Yes, pension received under EPS is taxable as salary or income from other sources in the year you receive it.
Not usually, because both the contribution and the pensionable salary are capped at the wage ceiling, now Rs 25,000, unless you are in an approved higher-pension arrangement. Above the cap, the extra employer contribution goes to EPF, not EPS.
Model the EPF and EPS split for any salary with the PF Calculator. For how retirement components sit inside a full package, see the Salary Breakup Calculator and our overview of payroll software for India.