Calculating pension under the EPS follows a straightforward method. By merely putting the values of certain parameters in the simple formula, you will be able to arrive at the pension amount you will be entitled to after you reach 58 years of age.

The Formula

Average Salary * Pensionable Service / 70 where,
  • Average Salary means the average of the Basic Salary + DA combined, drawn in the last 12 months, and
  • Pensionable Service means the number of years worked in the organized sector after 15th November, 1995. (For employees working from before 15th November, 1995, the formula will be different)

The Calculation

Let’s consider the maximum pension scenario keeping in mind the following:
  • Maximum Average Salary (Basic Salary + DA) considered for EPS is Rs.15,000
  • Maximum Pensionable Service considered for EPS is 35 years
So, upon applying the formula, (15000 * 35 / 70) = Rs. 7,500 per month is the maximum pension that one can earn through EPS.
Some points that are noteworthy here are:
  • The minimum pension that a person can earn under EPS is Rs. 1,000 per month.
  • It may happen that you do not stay in one organization throughout your career. As you change jobs, new EPF accounts are created, which results in new EPS accounts to be introduced under the same. So, by the time you finish your work life, you may have multiple EPS accounts. However, you will not receive multiple pensions as you are eligible to receive only one pension. Instead, all your accounts will be merged and then your pension calculation will be processed.

Who contributes towards your pension?

You do not contribute towards your EPS, instead your employer and the Government does in specific percentages. According to the law, the contributions are made in the following proportion by the respective contributors:
  • Your Employer matches your contribution towards EPF, out of which 8.33% goes towards the EPS
  • Government of India contributes 1.16% of your Average Salary (Basic Salary + DA)
In case of the employer’s and the Government’s contribution, the sum total of Basic Salary + DA is considered to a maximum of Rs. 15,000. This means that your employer will not contribute more than Rs. 1,250 (8.33% of 15,000) per month and the Government will contribute no more than Rs. 174 (1.16% of Rs. 15,000) per month towards your EPS.

If your Average Salary is more than Rs. 15,000, the Government will cease to contribute towards your EPS. Instead, you will be funding the 1.16% yourself towards your EPS.

Your post-retirement life is the time to unwind, sit back and relax. You wouldn’t want to worry about your finances at that time. Hence, you must know the pension calculation process beforehand so that you are not met with any unwarranted surprises in your golden years.


The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.

Trending Articles

Article Links


Employee Pension Scheme (EPS)

Pradhan Mantri Pension Plan

Types of Pension Plans

What is National Pension Scheme (NPS)

Latest Articles


How to Calculate PPF Returns

Read More
Posted on 08 February 2020

How to open an Employee Provident Fund account?

Read More
Posted on 05 February 2020

How is provident fund calculated – Know the Process

Read More
Posted on 11 January 2020