The Central Government has implemented the Employees’ Pension Scheme-EPS, 2026. This new scheme brought under the Code on Social Security, 2020 has now replaced EPS-1995 and Employees’ Family Pension Scheme, 1971. The objective of the new scheme is to provide regular pension every month to the employees after completing at least 10 years of pensionable service. However, the question in the minds of many employees is whether the method of calculating pension has changed in the new scheme? The answer is- no. The formula for calculating monthly pension in EPS-2026 has been kept the same as before.
This is how monthly EPS pension will be calculated
- Monthly pension under EPS-2026 will be calculated by this formula-
- Monthly EPS Pension = (Pensionable Salary × Pensionable Service) ÷ 70
Here pensionable salary means the average monthly salary of the last 60 months (5 years) before leaving the job or retirement. That is, if the average pensionable salary of an employee is Rs 15,000 and he has completed 10 years of eligible service, then he can get a pension of approximately Rs 2,143 per month.
How much pension can one get on 10 years of service?
If an employee has completed at least 10 years of pensionable service, the estimated monthly pension will depend on his average basic pay. For example, on an average basic salary of Rs 10,000, you will get a monthly pension of around Rs 1,429. At the same time, it is estimated that the pension will be Rs 1,571 on Rs 11,000, Rs 1,714 on Rs 12,000, Rs 1,857 on Rs 13,000, Rs 2,000 on Rs 14,000 and about Rs 2,143 per month on an average salary of Rs 15,000.
Who can become a member of EPS-2026?
According to the government notification, employees joining the EPF scheme on or after June 29, 2026, whose salary is within the salary limit fixed by the government, will be able to become members of the new EPS-2026 scheme. Apart from this, employees who were earlier members or eligible to become members of EPS-1995 or Employees’ Family Pension Scheme, 1971, will also come under the ambit of this new scheme.
What will happen if you leave the job before 10 years?
If an employee leaves the job before completion of 10 years of eligible service, he will have two options as before. He can withdraw his amount by taking Withdrawal Benefit or can get the Scheme Certificate. Later, if he works in any other EPF related institution, he will be able to avail the benefit of pension by adding the earlier service to the new service.
What changed in EPS-2026?
Although the method of calculating pension has not changed, many administrative reforms have been made in the new scheme. Now a target has been set to settle pension claims within 20 days. If EPFO delays the settlement of the claim without proper reason, a provision has been made to pay 12% annual interest to the concerned member. Apart from this, provisions related to Higher Pension have been included in the scheme and digital compliance has also been made mandatory for employers.
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