Will you get Rs 12.5K pension under new wage ceiling?

By Sohail Khan 18 September 2026, 1:29 pm

Synopsis

The Employees' Provident Fund wage ceiling has increased to Rs 25,000. This change will enable employees to receive higher retirement benefits and monthly pensions. Pension calculations now consider a higher pensionable salary and increased service years. Employees must contribute for five years at the new ceiling for maximum benefit. Eligibility for the Employees' Pension Scheme has also expanded for certain employees.

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The new Employees’ Provident Fund (EPF) wage ceiling of Rs 25,000 came into effect on Thursday. A higher wage ceiling will also help employees get higher retirement benefits, including a higher monthly EPS pension at retirement.

EPS pension is calculated on the basis of pensionable salary and number of years of service in which contributions were made to EPS. The higher the pensionable salary and service years, the higher your monthly pension will be. Pensionable salary is calculated as the average salary drawn in the last 60 months at the time of exit.

As the new wage ceiling of Rs 25,000 has just come into effect, for maximum benefit, employees will have to complete 5 years of contribution under the new wage ceiling from this point in time. Only those employees who have a basic salary of Rs 25,000 or more will be able to contribute the maximum EPS amount for the maximum EPS pension under the new wage ceiling.

	EPS Pension (Old)	EPS Pension (New)
Service Period	Wage Ceiling – Rs 15000	Wage Ceiling – Rs 25000
10 years	Rs 2,143	Rs 3,571
15 years	Rs 3,214	Rs 5,357
20 years	Rs 4,714	Rs 7,857
25 years	Rs 5,786	Rs 9,643
30 years	Rs 6,857	Rs 11,429
33 years	Rs 7,500	Rs 12,500

* Applicable only to employees who will complete next 5 years of EPS contribution at the new wage ceiling of Rs 25,000

How can you get more EPS pension under a higher wage ceiling?

To know how you can get a higher EPS pension under the Rs 25,000 wage ceiling, you need to know the role of the ceiling in the EPS pension calculation.

EPS calculation= Pensionable salary x pensionable service/70

Here, pensionable salary is the 60-month average salary drawn during the last 60 months before exiting the EPS fund. The maximum pensionable salary can be equal to the Rs 25,000 wage ceiling. Since the wage ceiling earlier was Rs 15,000, an increase of Rs 10,000 will help an EPS subscriber draw a higher pension.

Pensionable service is the number of EPS fund contributory years, and 70 is the life expectancy of 70 years, as determined by the government for pension calculations.

Also Read: Retiring soon? How much higher EPS pension will you get after the wage ceiling hike

Who is eligible to get EPS pension?

The majority of employees who were EPS members before September 1, 2014, and who have been contributing to EPS on the basis of the wage ceiling, will continue to retain their EPS membership. It is to be noted that 8.33% of the old wage ceiling of Rs 15,000, which is Rs 1,250, was being deducted from their employer contribution towards EPS. This contribution will rise to Rs 2,083, which is 12% of the new wage ceiling of Rs 25,000 once it is notified.

As per the earlier rule, any new employee joining an establishment from September 1, 2014, and drawing a basic pay of more than Rs 15,000 per month couldn’t get EPS membership. However, after the wage ceiling hike, employees with a basic pay above Rs 15,000 and up to Rs 25,000 will be eligible to join the EPS 2026 scheme.

After the government’s decision to increase the EPF wage ceiling, employees who have a basic salary of Rs 25,000 or below will be required to become EPS members in addition to the EPF. However, they can get EPS pension only on completion of 10 years of pensionable service.

What will happen to employees retiring within next 5 years?

However, employees who are bound to retire within the next 5 years will get only partial benefits of higher EPS pension. The quantum of benefit under the new wage ceiling will be linked to the number of months they spend contributing under the new wage ceiling. Nevertheless, to be eligible for EPS pension, employees must complete at least 10 years of service with EPS contributions.