If PF is deducted from your private-sector salary, part of your employer's share goes into the Employees' Pension Scheme, 1995 (EPS), which pays a monthly pension, not a lump sum. This post takes the formula from the scheme text EPFO publishes, works it for 15, 25 and 33 years of service, and covers early and deferred pension, the minimum pension, and what the September 2026 wage ceiling order does and does not settle. Every rupee figure below is our own estimate from the scheme's rules. Your Pension Payment Order (PPO) from EPFO is the final word.
Where the money comes from
Your own 12% PF deduction goes to EPF, not EPS. Of your employer's 12%, 8.33% goes to the pension fund and 3.67% to your EPF account, and the Central Government adds 1.16% to the pension fund. Under paragraph 3 of the scheme, these contributions are worked out on pay up to a wage ceiling. Membership of the pension fund continues until you turn 58.
How much PF is deducted from your salary? EPF, explainedTry it on your numbersPF Interest CheckerCheck the interest EPFO credited for a year against what the rule actually producesThe EPS pension formula
Paragraph 12(2) of the scheme gives the formula for a "new entrant". Members of the old Family Pension Scheme, 1971 ("existing members") have extra rules, noted at the end. In steps:
- Monthly pension = pensionable salary × pensionable service ÷ 70.
- Pensionable salary = the average monthly pay over the 60 months before you leave the pension fund (paragraph 11(1)), up to the maximum the scheme allows.
- Pensionable service = the years for which contributions reached the pension fund (paragraph 10(1)), rounded under paragraph 9.
- Weightage: if you have 20 years of pensionable service or more and retire at 58, 2 years are added to your service (paragraph 10(2)).
- Eligibility: at least 10 years of eligible service (paragraph 12(1)).
Source: EPFO: Employees' Pension Scheme, 1995, full text, paragraphs 9, 10, 11 and 12
Pensionable salary: the 60-month average, not your last salary
The salary in the formula is not your last drawn pay but the average monthly pay during contributory service in the 60 months before you exit the pension fund. If some of those months had no contribution, or only part-month pay, paragraph 11(1) divides the total wages in the 60 months by the days for which salary was drawn, and multiplies by 30.
Example: in your last 60 months you drew ₹11,000 a month for 24 months and ₹13,500 a month for 36 months. The average is (24 × 11,000 + 36 × 13,500) ÷ 60 = (2,64,000 + 4,86,000) ÷ 60 = ₹12,500. That ₹12,500 goes into the formula.
The average is subject to a maximum. In the scheme text EPFO publishes, paragraph 11(1) sets that maximum at ₹15,000 a month for service from 1 September 2014, and at ₹6,500 a month for service up to that date. Pay above the ceiling does not raise your pension unless you have a higher-pension option (covered further down).
The September 2026 wage ceiling: what the sources say
The EPFO wage ceiling went up from ₹15,000 to ₹25,000 a month with effect from 17 September 2026, under Gazette Notification S.O. 5109(E). On the pension side, two PIB releases from EPFO offices say this:
- EPFO Regional Office, Berhampore (PIB Kolkata, 23 September 2026): with the pensionable wage ceiling increased to ₹25,000, the maximum employer pension contribution at 8.33% rises from ₹1,250 to ₹2,083 a month.
- EPFO Special State Office, Imphal (PIB Imphal, 23 September 2026): where applicable, the maximum EPS contribution is to be worked out at 8.33% of ₹25,000 instead of 8.33% of ₹15,000, subject to the applicable statutory provisions and scheme rules.
Both figures check out: 8.33% of ₹15,000 is ₹1,249.50 and of ₹25,000 is ₹2,082.50, and paragraph 3 rounds 50 paise up.
What we could not confirm: the EPS text on EPFO's website, checked on 7 November 2026, still says ₹15,000 in the pensionable salary rule (paragraph 11) and in the pro-rata proviso to the formula (paragraph 12(2)). We did not find an amendment to those paragraphs, or an EPFO circular, that says how pension will be worked out for service from 17 September 2026. So the worked numbers below use the scheme text as published. Once the scheme is amended, the salary cap for your later service may be higher. Check the method with EPFO when you apply.
EPF wage ceiling ₹25,000: what it does to your salaryPensionable service: rounding and the 2-year weightage
- Paragraph 9: total contributory service is rounded off. A fraction of six months or more counts as one year, and less than six months is ignored.
- So 9 years 6 months counts as 10 years and meets the 10-year minimum. 9 years 5 months counts as 9 years and does not.
- 14 years 7 months counts as 15 years.
- Paragraph 10(2): with 20 years or more and retirement at 58, add 2 years. So 25 years becomes 27 and 33 years becomes 35 in the formula.
Worked examples: 15, 25 and 33 years
The table assumes retirement at 58. At the ₹15,000 maximum with 33 years, for example: 33 + 2 = 35 years, and 15,000 × 35 ÷ 70 = ₹7,500 a month. With 15 years there is no weightage: 15,000 × 15 ÷ 70 = about ₹3,214.29.
Our estimate under paragraph 12(2): pensionable salary × pensionable service ÷ 70, retirement at 58, 2-year weightage from 20 years (paragraph 10(2)). Assumes all service is counted at the salary shown. If part of your service was before 1 September 2014, see the next section.
15 years (15)
- Average ₹12,500
- ₹2,678.57
- Average ₹15,000 (maximum)
- ₹3,214.29
25 years (27, with weightage)
- Average ₹12,500
- ₹4,821.43
- Average ₹15,000 (maximum)
- ₹5,785.71
33 years (35, with weightage)
- Average ₹12,500
- ₹6,250.00
- Average ₹15,000 (maximum)
- ₹7,500.00
| Service (in the formula) | Average ₹12,500 | Average ₹15,000 (maximum) |
|---|---|---|
| 15 years (15) | ₹2,678.57 | ₹3,214.29 |
| 25 years (27, with weightage) | ₹4,821.43 | ₹5,785.71 |
| 33 years (35, with weightage) | ₹6,250.00 | ₹7,500.00 |
If part of your service was before 1 September 2014
The proviso to paragraph 12(2) says the pension is worked out pro rata: service up to 1 September 2014 at a maximum pensionable salary of ₹6,500, and service after that at a maximum of ₹15,000. Read plainly, that is two parts added together.
Example: 15 years of service from 1 December 2011 to 30 November 2026, average salary above ₹15,000. From December 2011 to August 2014 is 33 months, or 2.75 years. From September 2014 to November 2026 is 147 months, or 12.25 years.
- Before September 2014: 6,500 × 2.75 ÷ 70 = about ₹255.36
- After: 15,000 × 12.25 ÷ 70 = ₹2,625.00
- Total: about ₹2,880.36 a month, against ₹3,214.29 if all 15 years were counted at ₹15,000
This is our estimate from a plain reading of the proviso. The scheme text does not say how EPFO splits part-months at the boundary or, for service of 20 years or more, which part the 2-year weightage is added to. The longer your service before 2014, the bigger the gap, so for 25 or 33 years ask EPFO for the figure on your own record.
The ₹1,000 minimum pension
Paragraph 12(7A) says the monthly member's pension, including any relief, shall not be less than ₹1,000. Example: 10 years at an average of ₹6,000 gives 6,000 × 10 ÷ 70 = about ₹857.14. That is below the minimum, so ₹1,000 applies. The same paragraph says that, from 1 September 2014, the minimum is subject to the reduction for early pension, and to deductions for commutation or return of capital taken before 26 September 2008.
Early pension: from 50, with a cut
Pension is normally paid from the day after you turn 58, even if you left your job earlier (paragraph 12(6)). Paragraph 12(7) lets you draw it earlier, but not before 50. The pension is then reduced at the rate of 4% for every year your age falls short of 58.
- 15 years, ₹15,000 average, pension from 55: 3 years short, so a 12% cut. 3,214.29 × 0.88 = about ₹2,828.57 a month.
- Same member, pension from 50: 8 years short, so a 32% cut. 3,214.29 × 0.68 = about ₹2,185.71 a month.
These use the plain reading of 4% a year. The scheme text does not say whether the cut compounds year on year. If it does, the cut is smaller: about ₹2,843.79 at 55 and about ₹2,318.75 at 50. Your PPO will show the figure EPFO used.
Deferred pension: wait until 59 or 60
Paragraph 12(7B) lets a member who is eligible for pension at 58 defer it, but not beyond 60. The pension rises by 4% for every completed year after 58. If you are still working, you can also choose to keep contributing to the pension fund until 60, and that service and salary are then counted in the formula.
- 33 years, ₹15,000 average: ₹7,500 at 58.
- Deferred to 59: 7,500 × 1.04 = ₹7,800.
- Deferred to 60: 7,500 × 1.08 = ₹8,100 on the plain reading (₹8,112 if the 4% compounds).
If a member who has deferred dies before the pension starts, the family gets family pension as if the pension had started on the date of death (paragraph 12(7B)).
Leaving a job before 58
Under paragraph 12(8), if you leave before you can draw pension, you can take pension once you are past 50 (with the early-pension cut) or ask for a scheme certificate. It records your pensionable service, pensionable salary and the pension due on the date of exit, and when you join another covered establishment, that earlier service is counted with the new service towards the 10 years.
PF ka paisa kaise nikale: the online steps and conditionsHigher pension after the 2022 Supreme Court judgment
Paragraph 11(4) allows a higher pensionable salary for members who, on 1 September 2014, were already contributing on salary above ₹6,500 with the joint option of employer and employee, and who made a fresh joint option to continue on salary above ₹15,000. In its judgment of 4 November 2022 (EPFO vs Sunil Kumar B., Civil Appeal No. 8143-8144 of 2022), the Supreme Court held that the rule requiring these members to pay an extra 1.16% of salary above ₹15,000 was ultra vires the EPF Act. Notification S.O. 2061(E) of 3 May 2023, effective from 1 September 2014, moved that 1.16% to the employer: for members found eligible, the employer contributes 9.49% instead of 8.33% on the part of pay above ₹15,000.
EPFO's circular of 1 June 2023 sets the salary average for those found eligible. If pension started after 1 September 2014, it is the average pay on the higher wages over the 60 months before exit. If it started before that date, it is the average over 12 months. The formula is the same ÷ 70. Our examples do not cover higher pension; the result depends on your own salary record.
Build the calculator in Excel
Put your numbers in B1 to B4 and copy these formulas. The cap is ₹15,000 as the scheme text reads today. Change B5 if EPFO confirms a different cap for your service.
Put the formulas in B6 to B11 in the order shown, since each one uses the rows above. The early and deferred factor uses the plain 4%-a-year reading. The sheet does not split service before September 2014, and it does not cover higher pension or past service under the old Family Pension Scheme, 1971.
Options that change your answer
- Service before 1 September 2014: counted at a ₹6,500 cap, so your pension is lower than the flat formula.
- Age when the pension starts: 4% less for each year before 58, and 4% more for each completed year you defer, up to 60.
- A higher-pension option accepted by EPFO: salary above the cap counts.
- Under 10 years of service: no monthly pension. You get a withdrawal benefit or a scheme certificate instead.
- The 2026 wage ceiling: may change the cap for service from 17 September 2026 once the scheme is amended.
Out of scope here: existing members from the old Family Pension Scheme, 1971, who get a separate past-service pension under paragraph 12(3); widow, children and disablement pension; and exempted establishments that run their own pension fund.
EPF interest calculator in Excel, to check your PF passbookPF nikalne ke naye niyam 2026Plan the rest of your retirement income: Retirement CalculatorFrequently asked questions
- What is the EPS pension formula?
- Monthly pension = pensionable salary × pensionable service ÷ 70, under paragraph 12(2) of the Employees' Pension Scheme, 1995. Pensionable salary is the average pay over the last 60 months, up to the scheme's cap, and 2 years are added to service if you have 20 years or more and retire at 58.
- Did the ₹25,000 wage ceiling raise the EPS pension cap?
- EPFO's press releases say the maximum EPS contribution is now 8.33% of ₹25,000 (₹2,083 a month), where applicable. The scheme text on EPFO's website, checked on 7 November 2026, still caps pensionable salary at ₹15,000, and we found no amendment yet on how pension for later service will be worked out.
- Can I get EPS pension with 9 years 6 months of service?
- Yes. Paragraph 9 rounds a fraction of six months or more up to a full year, so 9 years 6 months counts as 10 years, which is the minimum for pension.