EPFO Pension: How Many Years of Service Required to Get Monthly Pension?

EPS Update – The most important benefit for PF employees is the monthly pension benefit. EPS is implemented for EPF employees. Under EPS, there is a provision for receiving a monthly pension after retirement. Upon retirement, a monthly pension is received every month.

A minimum of 10 years of service is required to receive the monthly pension benefit. Full pension begins at the age of 58. Under EPS, you can avail the pension benefit after 50 years of age. Due to the long service period, the amount is reduced. Learn how the pension amount is determined below.

Learn how the pension amount is determined.

It is also important to understand how the amount is determined under EPS. Pension in EPS is calculated using a formula: Monthly pension (pensionable salary x pensionable service) divided by 70.

Generally, the average of the employee’s last 60 months’ basic salary and DA is used. For most employees, it is limited to ₹15,000 per month for calculation purposes. Meanwhile, under EPS, your total years of savings are rounded off as per the scheme rules.

Consider an example: Your pensionable salary is ₹15,00,0 and you have 25 years of service. Your monthly pension will be approximately ₹15,000 x 25 ÷ 70 = ₹5357. This amount will be reduced if you retire before the age of 58. Under this scheme, if the member dies, the spouse easily receives the benefit of the widow’s pension. Child pension benefits are also available for up to two children up to a certain age. Furthermore, EPS also has a minimum pension period, but it is quite short.

Understand the meaning of the salary cap.

You will be pleased to know that even though many members earn more than ₹1,500, only ₹1,500 is counted for the EPS contribution and pension formula. This naturally limits the final pension. For some older employees who exercised the higher pension option based on actual pay, this limit may be significantly higher. Furthermore, if a member leaves the service before completing 10 years of service, they are not eligible for the monthly pension. Instead, they can avail of the withdrawal benefit, which is also based on the years of service schedule.