Employees' Pension Scheme: Eligibility, Types, Benefits
Shruti Kumari22 Dec, 2025
Employees' Pension Scheme is an important social security initiative under EPFO that provides financial stability after retirement. It supports employees by offering a structured retirement pension scheme linked to years of service and salary. Understanding EPS pension eligibility helps members plan their long-term benefits effectively.
The scheme uses a defined EPS pension calculation formula to determine the monthly EPS pension amount. Along with retirement income, EPFO pension benefits also protect families through widow, child, and disability pensions. Overall, the Employees' Pension Scheme plays a key role in ensuring income continuity and financial security during old age.
Employees' Pension Scheme
The Employees' Pension Scheme (EPS) is a critical component of employee welfare. It functions alongside the Employees' Provident Fund (EPF). Employers and employees contribute to EPF. A portion of the employer's contribution then diverts to EPS. This builds a pension fund.
Eligibility for Employees' Pension Scheme
Employees must be members of the Employees' Provident Fund (EPF) to join EPS. They need to complete at least ten years of service. This service can be continuous or non-continuous. The member must reach 58 years of age for normal pension. Early pension is available for 50 years.
Contribution to EPS
Only the employer contributes to EPS. A fixed percentage of the employee's salary goes into this fund. Specifically, 8.33% of the employer's share in EPF contributes to EPS. The maximum salary considered for contribution is ₹15,000 per month. Therefore, the maximum contribution is ₹1,250 per month.
EPS Pension Calculation
The Employees' Pension Scheme (EPS) calculates pension based on a specific formula. The EPS pension amount depends on two main factors: pensionable salary and pensionable service.
The formula is:
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Pensionable Salary: This is the average monthly salary drawn in the last 60 months of service. It is capped at ₹15,000.
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Pensionable Service: This is the total number of years an employee has contributed to EPS.
Types of EPS Pension
Various types of pensions exist under the scheme.
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Superannuation Pension: Available at 58 years of age with ten or more years of service.
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Early Pension: Can be availed at 50 years of age with reduced benefits.
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Widow/Widower Pension: Payable to the spouse upon the member's death.
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Children Pension: Payable to two children below 25 years of age.
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Orphan Pension: For children who lost both parents.
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Disabled Pension: For members who become permanently and totally disabled during service.
EPFO Pension Benefits
The EPS provides significant EPFO pension benefits. It ensures a regular income flow post-retirement. This scheme supports the family in case of the member's untimely demise. It acts as a safety net for dependents. The benefits provide crucial financial security. This makes it a vital retirement pension scheme.
Key Rules of Employees' Pension Scheme
The Employees' Pension Scheme operates under specific rules. Adhering to these rules ensures proper benefits. Understanding them is crucial for all members.
Service Period Rule
A minimum of ten years of qualifying service is mandatory. This service period makes a member eligible for pension. If service is less than ten years, members can withdraw their accumulated funds. They will not receive a monthly pension.
Age Rule for Pension
Normal pension starts at 58 years of age. Members can opt for an early pension from 50 years. However, early pension results in a reduced pension amount. The reduction is 4% for each year opted before 58 years. Deferring pension beyond 58 years (up to 60 years) increases the pension amount.
Withdrawal Rule
Members with less than ten years of service can withdraw their EPS contributions. This withdrawal does not qualify as a monthly pension. The withdrawal amount includes the employer's share and interest. Members cannot claim a monthly pension after withdrawal.