Know EPS-95 Monthly Pension Formula : If you’re a private sector employee, it’s important to understand that the Employees’ Pension Scheme (EPS-95), managed by the EPFO , ensures a fixed pension after retirement. This guide explains how your monthly pension is calculated under this scheme.
Know EPS-95 Monthly Pension Formula
Each month, 12% of your Basic Salary + Dearness Allowance (DA) is deposited by you into the EPF (Employees’ Provident Fund). Your employer matches this amount but splits their contribution—8.33% goes to EPS-95, and 3.67% is added to your EPF balance.
To become eligible for EPS pension benefits, you must contribute for at least 10 years. The maximum pensionable service under the scheme is 35 years.
Understand the EPS-95 Pension Fund Formula
The calculation of how much pension you will get in Employees’ Pension Scheme is done on the basis of a formula. This formula is- EPS-95 Pension Fund = Average Salary x Pensionable Service/ 70. Here average salary means basic salary + DA. Which is calculated on the basis of last 12 months.
Know EPS-95 Monthly Pension Formula
Monthly Pension = (Pensionable Salary × Pensionable Service) / 70
The maximum pensionable service is 35 years. The maximum pensionable salary is Rs 15 thousand. Due to this, the maximum pension part is 15000×8.33= Rs 1250 per month.
In such a situation, if we understand EPS-95 Pension Fund calculation on the basis of maximum contribution and years of service, then- EPS= 15000 x35 / 70 = Rs 7,500 per month. In this way, the maximum pension from Employees’ Pension Scheme can be Rs 7,500 and the minimum pension can be up to Rs 1,000. You can also calculate your pension amount through this formula.
EPS-95 Formula Applicable Post-1995
Note that this pension formula applies only to employees working in the organized sector after 15 November 1995. Those who joined before this date are subject to different rules.
Additionally, many employee unions have urged the government to increase the pensionable salary limit, citing rising inflation and changes in salary structures.
Employees’ Pension Scheme Early and Delayed Pension Rules
Under the Employees’ Pension Scheme (EPS-95), an employee becomes eligible for full pension benefits at the age of 58 years. However, the scheme also provides flexibility with early pension starting from 50 years of age, albeit at a cost. If you opt for pension before 58, your monthly payout will be reduced by 4% for each year taken early.
For example, if you begin drawing pension at 56 years, you will receive only 92% of your entitled pension. Conversely, if you delay pension until 60, your monthly amount will increase by 8%, adding 4% for each extra year of postponement. This adjustment encourages employees to continue service for a longer period and secure a higher pension payout.
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