EPS (Employee Pension Scheme)

Learn about the Employee Pension Scheme (EPS), a retirement scheme for organized sector employees in India.
Employee Pension Scheme
4 mins
22 March 2024

EPS, or the Employee Pension Scheme, launched in 1995 to help employees in organised sectors save for retirement. All employees eligible for the EPF scheme automatically qualify for EPS.

What is Employee Pension Scheme?

The Employees' Pension Scheme is a social security initiative offered by the Employees’ Provident Fund Organisation (EPFO). This scheme aims to help employees in the organised sector, providing a pension post-retirement at 58. To avail benefits, an employee must have completed at least 10 years of service. Both existing and new EPF members are eligible for EPS scheme.

Both the employer and the employee contribute 12% of the employee's pay, with the entire employee share going to EPF. Out of the employer's share, 8.33% go towards Employees’ Pension Scheme (EPS), while 3.67% is allocated to EPF every month.

As you plan for the future, remember that FDs can be a valuable asset alongside your PF contributions. Use FDs for specific goals like a down payment, education expenses, or to supplement retirement savings.

Benefits of Employee Pension Scheme

  • Eligibility for pension benefits start when a member retires at the age of 58 years. A minimum service period of 10 years by the age of 58 is mandatory for availing pension benefits.
  • If a member can't complete 10 years of service before turning 58, they can withdraw the entire sum at the age of 58 years using Form 10C. Monthly pension benefits are not available in this case.
  • If an EPFO member becomes permanently disabled, they get a monthly pension, no matter their service period.
  • In case of the member's unfortunate demise, it offers pension benefits to the member's family, whether it happens before or after the pensionable service period.

How to calculate your pension under EPS

The pension amount depends on member’s pensionable salary and service duration. Here is the formula for calculating monthly pension income:

Member’s Monthly Pension = (Pensionable salary x Pensionable service)/70

1. Pensionable salary

Pensionable salary refers to the average monthly earnings in the last 60 months preceding the member's exit from the EPS.

In case of non-contributory periods within the last 60 months of employment, the non-contributory days won't be considered, and the corresponding benefits will be granted to the employee. For example, if someone starts a job on the 3rd of the month and assuming a person's salary is Rs. 15,000, the salary for 28 days would be Rs. 14,000 (Rs. 500 per day less for two days). However, the monthly salary considered for EPS would be for 30 days, i.e., Rs. 15,000.

The maximum pensionable salary is capped at Rs. 15,000 per month.

Given that the employer contributes 8.33% of this salary to the employee’s EPS account, the monthly deposit in the employee’s EPS account is:

Rs. 15000 x 8.33/100 = Rs. 1250

2. Pensionable Service

The pensionable service is referred to actual period of service for the member. Service periods across different employers are considered when calculating the pensionable service period. The employee must obtain the EPS Scheme certificate and submit it to the new employer whenever they switch jobs.

If a member withdraws the EPS amount before completing 10 years and joins another company, they must restart contributing to the EPS account, and the service period will be reset to zero.

The pensionable service period is assessed on a 6-month basis, with a minimum of 6 months. For instance, if the service period is 7 years and 3 months, the considered pensionable service is 7 years. However, if the service duration is 7 years and 11 months, the pensionable service period is considered as 8 years.

Eligibility criteria applicable for EPS

  1. Individual must be an EPFO member.
  2. To get early pension, you should be at least 50 years old, and for regular pension, you need to be 58 years old.
  3. You must complete at least 10 years of service to avail benefits of EPS.

Types of pensions in the Employees’ Pension Scheme

The EPS 95 pension scheme offers various pensions, including those for widows, children, and orphans, providing support to the deceased member's family.

  1. Child pension
    Surviving children receive a child pension, in addition to the monthly widow pension, until they turn 25. The amount is 25% of the widow pension, and a maximum of two children can receive this benefit.
  2. Widow pension
    Widows are eligible for a pension under the Widow or Vridha pension, which continues until their death or remarriage. If there are more than one widow, the pension is payable to the eldest widow.
  3. Reduced pension
    If an EPFO member completes 10 years of service and is between 50 and 58 years old, they can opt for early pension. However, If the member is below 58 years of age, the pension amount is reduced by 4% for every year.
  4. Orphan pension
    If the member passes away without a surviving widow, the member's children can receive a monthly orphan pension, which is 75% of the monthly widow pension value. Up to 2 children can benefit from the orphan pension.

Types of pensions forms under EPS in India

  1. Form 10C: Used for withdrawal funds before completing 10 years of service.
  2. Form 10D: Used for monthly pension withdrawal after reaching 50 years of age and for other pensions like monthly widow pension, child pension, etc.
  3. Non-remarriage certificate: It is used to declares that the widow/ widower has not remarried.


Employee Pension Scheme (EPS) offers financial security to employees of the organised sector after retirement by providing them a guaranteed pension based on years of service and contributions. Understanding the eligibility criteria and the types of pensions available under EPS can help employees make informed decisions to secure their future.


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