For eligible members covered under the Employees\u2019 Pension Scheme (EPS) 2026, the salary and increments they earn during the final five years of service can have a greater bearing on their pension than the salary earned during much of their earlier career.<\/p>\n
This is primarily because EPS <\/a>does not calculate pensionable wages using an employee\u2019s entire career average. In fact, it looks at the average monthly wages over the 60 months immediately preceding a member’s leaving the scheme. This aspect makes the final five years particularly important for pension calculation <\/a>and planning.<\/p>\n EPS formula for monthly pension calculation<\/strong>Monthly Pension = (Pensionable Wages \u00d7 Pensionable Service) \u00f7 70<\/p>\n For example, if pensionable wages are \u20b915,000 and pensionable service is 30 years, the monthly pension would be about \u20b96,429. With 15 years of service, the pension would be around \u20b93,214.<\/p>\n The scheme provides for a two-year weightage to pensionable service for members who retire after completing at least 20 years of service. Still, this only increases the service component. It does not change the fact that pensionable wages are based on the final five years of service.<\/p>\n Service years and final wages shape pension<\/strong><\/p>\n Pensionable wages are subject to the applicable wage ceiling. Currently, the ceiling is \u20b915,000 per month until a member qualifies under the provisions for higher pension contributions.<\/a> Thus, salary increases beyond this limit generally do not increase the pension calculation.<\/p>\n At the standard \u20b915,000 pensionable-wage ceiling, a member with 35 years of pensionable service would have a formula-based pension of \u20b97,500 a month ( \u20b915,000 \u00d7 35 \u00f7 70).<\/p>\n This is a commonly cited illustration, not a universal maximum for every EPS member, as it directly depends on the total service rendered by an individual. EPFO’s scheme<\/a> material provides for pensionable service of up to 35 years, subject to the applicable rules.<\/p>\n This rule also accounts for periods when an individual employee does not receive full wages. Certain non-contributory or unpaid periods can be adjusted so that the pensionsable wage calculation is based on actual wage-earning days.<\/p>\n