Aug 06, 2026, 12:31:24 PM IST

According to a Moneycontrol report, the Department of Expenditure has approved a proposal to increase the EPF wage ceiling from Rs 15,000 to Rs 25,000, subject to Cabinet approval. If implemented, employees earning up to Rs 25,000 in basic pay and dearness allowance (DA) would come under mandatory EPF and EPS coverage. While this could reduce take-home salary because of higher PF contributions, it may also significantly increase retirement savings and monthly EPS pension.

ET Online

Increasing the EPF/EPS wage ceiling to Rs 25,000 would raise the contribution flowing to the Employees' Pension Scheme (EPS) because 8.33% of the employer's statutory contribution is diverted to EPS. This could substantially increase the monthly pension, although the employer's contribution to EPF would reduce to that extent, marginally lowering the final EPF corpus.

Getty Images

Under the current rules, employees with basic pay and DA up to Rs 15,000 are mandatory members of EPS and become eligible for pension after completing at least 10 years of pensionable service. The pension formula remains unchanged under EPS 2026:
Monthly EPS Pension = (Pensionable Salary × Pensionable Service) ÷ 70
Employees completing 20 years or more of service receive a 2-year bonus while calculating pensionable service.

Getty Images

The table compares the estimated monthly EPS pension under the current Rs 15,000 wage ceiling and the proposed Rs 25,000 wage ceiling for employees completing 10 years of eligible pensionable service.

ET Online

ET Online

For employees completing 20 years of eligible service, the EPS rules add 2 bonus years, meaning pension is calculated as if the employee has completed 22 years of pensionable service. The table compares the estimated pension under both wage ceilings.

ET Online

For employees completing 25 years of eligible service, two additional years are added, making the pension calculation based on 27 years of service. The table above compares the estimated monthly pension under the Rs 15,000 and proposed Rs 25,000 wage ceilings.

ET Online

The table above compares the estimated monthly EPS pension after 30 years of eligible service under the existing Rs 15,000 wage ceiling and the proposed Rs 25,000 wage ceiling.

ET Online

The table above compares the estimated monthly EPS pension after 33 years of eligible service under the existing Rs 15,000 wage ceiling and the proposed Rs 25,000 wage ceiling.

ET Online