EPS (Employees’ Pension Scheme)
The Employees' Pension Scheme (EPS), 1995, is a social security scheme administered by the EPFO that provides a monthly pension to employees after retirement, or to their family in case of the employee's death. Unlike EPF, EPS does not accumulate as a lump-sum corpus with employee contribution; it is funded entirely from a portion of the employer's contribution.
Out of the employer's total 12% EPF contribution, 8.33% is diverted to EPS, calculated on a pensionable wage capped at ₹15,000 per month (so a maximum of ₹1,250/month per employee), with the central government also contributing 1.16% towards EPS. An employee becomes eligible for pension after completing 10 years of eligible service, payable from age 58.
Key points
- ✓ Funded from 8.33% of the employer's EPF contribution, capped at ₹15,000 pensionable wage
- ✓ Employee does not contribute separately to EPS from their own share
- ✓ Requires a minimum of 10 years of eligible service to qualify for monthly pension
- ✓ Pension is payable from age 58 (early pension available from 50 at a reduced rate)
- ✓ Provides family/widow pension in case of the member's death
Example
An employee with a basic salary of ₹25,000/month has EPS contribution capped at the ₹15,000 pensionable wage, so the employer diverts ₹1,250/month (8.33% of ₹15,000) to EPS regardless of the actual basic salary being higher.
Frequently asked questions
Do employees contribute to EPS separately?
What is the minimum service required for EPS pension?
Can I withdraw my EPS amount if I have less than 10 years of service?
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