EPFO Pension Update: In response to ongoing requests regarding the Employees’ Pension Scheme (EPS-95),the central government has made it clear in Parliament that there is no current proposal to connect pensions to the actual basic salary without any cap. This information was shared by Union Labor and Employment Minister Mansukh Mandaviya in a written response to the Lok Sabha on March 30,2026.
What did the government say?
MP Giridhari Yadav inquired whether EPS pensions are still determined by a salary cap of Rs 15,000,which leads to reduced pensions for those earning higher salaries. He also asked if there are plans to modify this in the future and base pensions on actual earnings.
What was the minister’s response?
In his reply,the minister explained that EPS-1995 operates as a “defined contribution-defined benefit” social security scheme. He noted that the pension fund contributions are made up of two parts—8.33% from the employer and 1.16% from the central government. However,the government’s contribution is capped at a maximum salary of Rs 15,000. This is the reason pensions are not entirely linked to actual salaries.
The minister further mentioned that regulations have been tightened since September 1,2014. Now,only employees earning Rs 15,000 or less at the time of joining can enroll as EPS members. While some employees who joined before 2014 had the option to contribute at higher salaries,this limit is applicable to new hires.
Change in the method of pension calculation!
The government also informed that the Code on Social Security,2020,which also covers EPS,has now come into effect. However,despite this new law,no changes have been made to the method of pension calculation. Meanwhile,demands from employees and pensioners are growing.
They say that the minimum pension of Rs 1,000,which has not been increased since 2014,is too low in today’s inflationary times. Trade unions and pensioners’ organizations are demanding an increase to Rs 7,500 to Rs 9,000 and the addition of dearness allowance (DA). While the government has accepted these demands,no final decision has been taken yet,citing the increasing burden on funds and challenges to fiscal balance.
