EPS Minimum Pension Hike: Will The Government Announce An Increase?

The Employees' Pension Scheme (EPS) offers a pension to the Employees’ Provident Fund Organisation (EPFO) subscribers. It was introduced in 1995 to offer financial security to subscribers after their retirement. However, unlike the employee provident fund (EPF) to which both employee and employer contribute, in the case of the EPS, contribution is made only by the employer. Of the stipulated 12 per cent contribution of the salary to the EPF by the employer, 3.67 per cent goes to the EPF, and the remaining 8.33 per cent to the EPS, which is paid in a lump sum. On the other hand, EPS is a pension amount that is paid on a monthly basis to the subscriber.

Is Government Considering Raise In Minimum Pension Under EPS?

On a question of whether the demand to raise minimum EPS is under consideration, Shobha Karandlaje, Minister of State for Labour and Employment, gave a written reply in the Rajya Sabha on July 24, 2025. It acknowledged that the government has received representations from various stakeholders demanding a hike in minimum pension under EPS.  

But whether the government is considering an increase, the reply reads, “The corpus of the Employees’ Pension Fund is made up of (i) contribution by the employer @ 8.33 per cent of wages; and (ii) contribution from Central Government through budgetary support @ 1.16 per cent of wages up to an amount of Rs.15,000/- per month. All benefits under the scheme are paid out of such accumulations.”

It brings attention to the central government contribution to the scheme, which is 1.16 per cent of the wage up to the limit (Rs 15,000 monthly wages). This contribution is made through the budgetary allocation towards the scheme.

“The fund is valued annually as mandated under paragraph 32 of the EPS, 1995, and as per the valuation of the fund as on 31.03.2019, there is an actuarial deficit”, per the reply.

It denotes that the government already provides a minimum Rs 1,000 pension under EPS and also supports by contributing 1.16 per cent annually for all EPS contributors through budgetary allocation.

While the employee associations continue demanding a hike in minimum pension due to rising costs and inflation, the government has not indicated anything yet in this regard.  

What Is Employee Pension Scheme?

EPS was introduced in 1995 with an aim to provide a monthly pension to retirees in the organised sector. It is mandatory for those earning up to Rs 15,000 and optional for those earning more than this.

How EPS Is Calculated?

EPS is calculated based on the number of years one has worked and the amount of salary.

The formula is:

EPS = (Pensionable Salary × Pensionable Service) / 70

However, the minimum pension under EPS is Rs 1,000 as of now.

While employee associations and trade unions have been demanding to raise the minimum pension amount under EPS be raised from Rs 1,000 to Rs 7,500, the government has not made its stand clear yet.