In an important decision that can impact a large number of employees from the organised sector, the central government today (Wednesday, September 16, 2026) approved a hike in the monthly wage ceiling for Employees' Provident Fund (EPF) from Rs 15,000 to Rs 25,000.
In a cabinet briefing today, Union minister Ashwini Vaishnaw said that the government would spend around Rs 11,339 crore every year as part of the move, which is aimed at widening social security coverage for employees.
This comes as a significant change since the EPF wage ceiling of Rs 15,000 had been in effect since September 1, 2014. The change will bring a lot of new employees into the coverage of the EPF and Employees’ Pension Scheme (EPS), as those earning up to Rs 25,000 in basic pay and dearness allowance will be required to join both schemes.
Also Read: Retiring soon? How much higher EPS pension will you get after the wage ceiling hike
Notably, this update also brings an added cheer for many as the EPS pension for those under the coverage may also rise up to 67%.
However, the rule for the EPS pension will be conditional on employees completing up to 5 years of service under the new wage ceiling of Rs 25,000 once it comes into effect. So, if you do not complete five years under the new wage ceiling and retire, your pensionable salary will not be Rs 25,000, but less
The more the number of years, up to 5 years, you spend under the new wage ceiling, the higher your pension will be. So, the maximum benefit of 67% of this new ceiling will be for those employees who complete 5 years under the new wage ceiling.
According to Noorul Hassan, executive partner, Lakshmikumaran & Sridharan for those employees who have EPS, the EPS pension amount will also see an increase since the base for calculation is enhanced from Rs 15,000 to Rs 25,000 per month.
Also read: EPF wage ceiling hike: Lesser take home salary for these employees; know how you will be impacted
Who gets EPS pension?
As per the existing rule, any new employee joining an establishment from September 1, 2014, and drawing a basic wage of more than Rs 15,000 per month couldn’t get membership of the EPS pension fund.
After the government’s new wage ceiling decision, employees who have a basic salary and DA of Rs 25,000 or less will also be required to become EPS members in addition to the EPF. However, they will become eligible for pension only after completing 10 years of service.
The majority of people who were EPS members before September 1, 2014, and who have been contributing to EPS on the basis of the wage ceiling, will be automatic beneficiaries of a higher EPS pension with the current wage ceiling hike. It is to be noted that 8.33% of the old wage ceiling of Rs 15,000, which is Rs 1,250, was being deducted from their employer contribution towards EPS. This contribution will rise to Rs 2,083, which is 12% of the new wage ceiling of Rs 25,000 once it is notified.
Those employees who had a salary above Rs 15,000 but up to Rs 25,000 could not join EPS after August 31, 2014. However, after the wage ceiling hike, employees with a salary above Rs 15,000 and up to Rs 25,000 will be eligible to join the EPS 2026 scheme.
Also Read: 8th Pay Commission: Can Level 10 employees get up to Rs 57,000/month HRA ?
How is EPS pension calculated?
As per the EPS Pension Scheme 2026, the EPS calculation formula is as follows-
Monthly EPS pension = (Pensionable salary × pensionable service) ÷ 70
Here, pensionable salary is the average monthly salary (basic pay+dearness allowance) drawn during the last 60 months before exiting the pension fund.
In this write-up, we will calculate the monthly EPS pension based on the wage ceilings of Rs 15,000 and Rs 25,000 for service periods ranging from 10 to 30 years. We will calculate the estimated additional pension that many EPS subscribers can get under the Rs 25,000 wage ceiling.
Also Read: 8th Pay Commission: How basic salary of Level 6 employees may double in 7 years after DA merger?
According to the Employees’ Provident Fund Organisation (EPFO) rules, if an employee has 20 or more years of service, they get a 2-year bonus. It means that if someone has completed 20 years of service, their service years for EPS pension calculation will be counted as 22 years. Similarly, if they have 25 years of service, it will be counted as 27. At 30 years of service, years of service will be calculated as 32.
10 years of eligible service- Know your EPS pension
| Basic pay | ₹ 25,000 |
| Service years | 10 |
| Pension under Rs 15,000 wage ceiling | ₹ 2,143 |
| Pension under Rs 25,000 wage ceiling | ₹ 3,571 |
| Extra pension under Rs 25,000 wage ceiling | ₹ 1,429 |
| Pension increase (%) | 67% |
| Basic pay | ₹ 25,000 |
| Service years | 15 |
| Pension under Rs 15,000 wage ceiling | ₹ 3,214 |
| Pension under Rs 25,000 wage ceiling | ₹ 5,357 |
| Extra pension under Rs 25,000 wage ceiling | ₹ 2,143 |
| Pension increase (%) | 67% |
| Basic pay | ₹ 25,000 |
| Service years | 22 |
| Pension under Rs 15,000 wage ceiling | ₹ 4,714 |
| Pension under Rs 25,000 wage ceiling | ₹ 7,857 |
| Extra pension under Rs 25,000 wage ceiling | ₹ 3,143 |
| Pension increase (%) | 67% |
| Basic pay | ₹ 25,000 |
| Service years | 27 |
| Pension under Rs 15,000 wage ceiling | ₹ 5,786 |
| Pension under Rs 25,000 wage ceiling | ₹ 9,643 |
| Extra pension under Rs 25,000 wage ceiling | ₹ 3,857 |
| Pension increase (%) | 67% |
| Basic pay | ₹ 25,000 |
| Service years | 32 |
| Pension under Rs 15,000 wage ceiling | ₹ 6,857 |
| Pension under Rs 25,000 wage ceiling | ₹ 11,429 |
| Extra pension under Rs 25,000 wage ceiling | ₹ 4,571 |
| Pension increase (%) | 67% |
