EPS

Why it matters to your business

EPS is part of what you pay as PF, so it is part of your cost of every employee. It is also one of the benefits your staff count on after retirement, and a common source of questions when they change jobs or leave. Paying the right amount under the right head, and keeping each employee’s service linked to one UAN, saves them trouble years later.

How it works

As of September 2026:

• The employer’s 12% PF contribution is split: 8.33% of wages up to the ceiling to EPS, and the remainder to the employee’s PF account.
• The wage ceiling was ₹15,000 a month for many years; a higher ceiling was announced in September 2026. EPFO’s instructions on how the pension share and pension calculation follow it were still being issued; check them on epfindia.gov.in before you run payroll.
• Employees who joined PF after 01-09-2014 with wages above the ceiling at that time are not EPS members.
• Members who contributed on wages above the ceiling with the joint option allowed by the Supreme Court may be eligible for a higher pension.
• The scheme, first set up in 1995, now runs under the Code on Social Security, 2020.

An example

An employee’s basic pay and dearness allowance total ₹15,000 a month. The employer pays 12%, or ₹1,800: ₹1,250 (8.33%) goes to EPS and ₹550 to PF. After 30 years of service with pensionable salary of ₹15,000, the pension would be ₹15,000 × 30 ÷ 70, about ₹6,429 a month.

Common mistakes

• Paying the whole employer’s 12% into PF and nothing into EPS.
• Contributing to EPS for employees above 58, who are no longer eligible.
• Letting an employee open a second UAN, which breaks their pensionable service into pieces.