EPF: If your salary exceeds ₹25,000, how much pension will you receive upon retirement?
If your combined basic salary and Dearness Allowance (DA) exceed ₹25,000, this information is relevant to you. Following the new wage ceiling, the EPS pension will be calculated based on this prescribed limit. Here are the full details.
The Union Cabinet has decided to raise the mandatory wage ceiling (salary limit) under the Employees' Provident Fund (EPF) and Employees' Pension Scheme (EPS) from ₹15,000 to ₹25,000 per month. Consequently, employees whose combined basic salary and DA exceed ₹25,000 may be wondering: how much monthly pension will I receive upon retirement under the new rules?
In fact, the EPS pension is not calculated based on the entire salary; instead, a maximum salary limit is set for this purpose. Even with the new limit of ₹25,000, if your basic salary is ₹40,000, ₹60,000, or ₹1 lakh, the pension calculation under standard rules will still be based on the maximum cap of ₹25,000.
How much pension will you get if your salary is ₹40,000, ₹60,000, or ₹1 lakh?
If your basic salary exceeds the new wage ceiling of ₹25,000, the pension calculation under standard EPS rules will consider the prescribed maximum limit rather than your actual total salary. The specific pension amount may vary depending on the number of years you have served.
| Years of Service | Effective Service Years (Including 2-Year Bonus) | Calculation | Estimated Monthly Pension |
|---|---|---|---|
| 10 years | 10 years | (25,000 × 10) / 70 | ₹3,571 |
| 15 years | 15 years | (25,000 × 15) / 70 | ₹5,357 |
| 20 years | 22 years | (25,000 × 22) / 70 | ₹7,857 |
| 25 years | 27 years | (25,000 × 27) / 70 | ₹9,643 |
| 30 years | 32 years | (25,000 × 32) / 70 | ₹11,429 |
| 33+ years (maximum 35 years) | 35 years (maximum limit) | (25,000 × 35) / 70 | ₹12,500 (maximum possible pension) |
10 years of service: Approximately ₹3,570 per month
15 years of service: Approximately ₹5,350 per month
20 years of service: Approximately ₹7,850 per month
25 years of service: Approximately ₹9,640 per month
33 years or more: Maximum of approximately ₹12,500 per month
In other words, based on the new wage ceiling of ₹25,000, the maximum calculated EPS pension could reach approximately ₹12,500 per month. However, your actual pension will be determined based on your tenure of service and applicable EPS rules.
What bonus is available for service exceeding 20 years?
If you have been employed under the EPS for more than 20 years, an extra bonus of two years of service can be added to the tenure used for pension calculation. Essentially, this increases the service period considered for calculating the pension.
Will the PF amount be received upon retirement?
Apart from the monthly EPS pension, the amount accumulated in the employee's PF account remains separate. Interest continues to accrue on the PF contributions made by both the employee and the employer. Consequently, at the time of retirement, the accumulated PF corpus is paid out as a lump sum in accordance with the applicable rules.
