EPS 2026: Can You Increase Your Monthly Pension Without Contributing More?

The long-standing Employees’ Pension Scheme (EPS) of 1995 has now been replaced with the Employees’ Pension Scheme (EPS), 2026. The new EPS 2026 has become effective on June 29, 2026, following the gazette notification. This has been done to align this decades-old social security with the Code on Social Security, 2020, to create a contemporary structure for employee benefits.

While the core objective remains the same, that is to provide pension benefits to the members, the scheme has introduced some administrative changes and adopted a digital-first approach to make the scheme more effective. The existing members will become members of EPS 2026 without any fresh enrollment, and new members will be added based on the salary criteria.  

The deposit-related rules remain the same. For example, the employers’ contribution remains the same at 8.33 per cent of the pensionable salary, the employee contribution at 3.67 per cent, and the government continues to contribute 1.16 per cent to the pension pool. Other benefits, including early pension withdrawal, widow pension, disability pension, etc., are also kept unchanged. Even the minimum stipulated monthly pension of Rs 1,000 has remained the same under EPS 2026.  

A major change has been made in the claim settlement process, which used to be manual and time-consuming. Under EPS-2026, electronic compliance has been made mandatory. EPFO has also introduced a 20-day timeline for claim settlement and has introduced a penalty of 12 per cent annual interest if the payment is delayed beyond the timeline without sufficient cause.

While the pension is calculated based on a formula that also remains the same in the new EPS 2026, is there something one can do to boost the monthly pension without contributing more? Let's check.

Can A Member Boost The Monthly Pension Without Contributing More?

The answer is yes. Note that the pension under EPS is payable after superannuation, which is defined as 58 years under EPS rules. As a member reaches superannuation, contributions end and the pension starts. However, a pension can also be payable in case of the death of the member or of one who vests the pension. Despite being a small amount, EPS is a source of lifelong income that starts after turning 58 years of age.  

While deferment is easily available in the National Pension System (NPS) until the age of 85, EPFO offers pension withdrawal deferment only up to 60 years of age. However, unlike NPS, it offers a guaranteed 4 per cent additional pension for each year. This is an existing benefit that continues in the EPS 2026 as well.

Per the Gazette notification for EPS 2026, under Para 9 (a), a member who has attained the age of superannuation and is otherwise eligible for pension may be allowed to defer the age of drawing pension later than the age of superannuation, but not beyond sixty years of age. Para 9 (b)(i) explains the additional pension. It reads, “In such cases, the amount of pension shall be increased at the rate of four per cent for every completed year after the age of superannuation, subject to the wage ceiling.”

How Much Can The Pension Increase If Withdrawal Is Deferred?

Says Akhil Chandna, Partner and Global People Solutions Leader, Grant Thornton Bharat: “The scheme incentivises deferment by providing a four per cent increase in monthly pension for every completed year of deferment after the age of superannuation, subject to a maximum deferment up to 60 years of age and applicable wage ceiling.”

To clarify the increment, he shares an example. “If a member is eligible for a monthly pension of INR 8,000 at the age of 58, the pension would increase to Rs 8,320 per month if deferred by one year (4 per cent increase) and Rs 8,640 per month if deferred by two years (8 per cent increase).”

So, a member can avail a total of eight per cent additional pension benefit by deferring the withdrawal by just two years.

However, Chandra points out that the pension can further increase if the employee continues working and contributing to EPS during the deferment period. “The scheme permits continued contributions to the Pension Fund during the deferment period, subject to the prescribed conditions and not beyond the age of 60 years. In practical terms, this option is primarily beneficial for employees who continue working beyond 58 years and are willing to postpone their pension in return for a higher lifelong monthly pension,” says Chandra.

To sum up, EPS 2026 carries the rule and offers up to an eight per cent increment in monthly pension if withdrawal is deferred. In case of continuous working after 58, the eventual pension can be significantly boosted both by deferment and higher pensionable service and wages.