EPS Pension Calculator: Along with EPF (Employees Provident Fund), EPS (Employees Pension Scheme) is also an important part of retirement planning for employees working in the private sector. However, a limit of ₹15,000 is applicable in normal calculations despite the higher basic salary. Separate rules apply to employees eligible for higher pension.
A contribution of 12% of the basic salary and dearness allowance (DA) of employees employed in the private sector goes to the EPF. Employer (company) also contributes 12% to EPF. Of the 12% contribution from the employer that goes to the EPF, 8.33% goes to the employee’s pension fund (EPS). This fund becomes an important basis for getting monthly pension after retirement.
What is the formula for calculating EPS pension?
The monthly pension in EPS is calculated by a specific formula.
$$\text{Monthly Pension} = \frac{\text{Pensionable Salary} \times \text{Pensionable Service}}{70}$$
Two things are most important in this formula — pensionable salary and pensionable service.
How much pension will get on 25 years of service?
The maximum limit of pensionable salary for normal EPS calculation in cases after 1 September 2014 is ₹15,000 per month. If an employee has a pensionable salary of ₹15,000 and has completed 25 years of service, the calculation will be as follows.
$$\frac{₹15,000 \times 25}{70} = ₹5,357.14$$
That means an employee can get an EPS pension of around ₹ 5,357 per month.
How much pension amount will be received in a year?
| detail | Calculate and amount |
| Monthly Pension | Around ₹5,357 |
| Annual Pension (12 months) | ₹5,357 × 12 = ₹64,284 |
That means an employee with 25 years of service and a pensionable salary of ₹15,000 will get an EPS pension of around ₹64,284 per annum.
Pension is not made on full basic salary
One of the biggest misconceptions about EPS is that the employee’s entire basic salary is included in the pension calculation. Even if an employee’s basic salary is ₹20,000, ₹30,000 or more, still the salary limit for pension is considered to be ₹15,000 as a general rule.
Different rule for higher pension holders
In case of employees who have availed higher pension option, different rules are applicable for calculation of pension. Hence the limit of ₹15,000 is not final for all employees having higher basic salary.
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