Employees' Pension Scheme (EPS), a social security programme, is administered by the Employees' Provident Fund Organisation (EPFO). The system provides a pension to employees working in the organised sector once they retire at the age of 58. Both existing and new EPF members can participate in the EPF plan.

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However, to avail of the benefit of this pension facility under EPS, it is necessary to contribute to EPS for a minimum of 10 years i.e. the employee must have been employed for 10 years. Whereas the maximum pensionable service is 35 years. Let us tell you the formula through which you can calculate how much pension you will get after retirement.

EPFO pension calculation formula

How much pension you will get in EPS is calculated based on a formula. 

This formula is- EPS = Average Salary x Pensionable Service/70. 

Here average salary means basic salary + DA. Which is calculated based on the last 12 months. Maximum pensionable service is 35 years. The pensionable salary is a maximum of Rs 15,000. Due to this, the maximum share of pension becomes Rs 15,000x8.33= Rs 1250 per month. In such a situation, if we understand the EPS pension calculation based on maximum contribution and years of service, then - EPS = 15000 x35/70 = Rs 7,500 per month. In this way, the maximum pension can be taken from EPS up to Rs 7,500 and the minimum pension up to Rs 1,000. You can also calculate your pension amount through this formula.

An employer contributes 3.67 per cent of the employee's salary towards the EPF and 8.33 per cent towards the EPS. The interest rate for FY24-25 is 8.25 per cent. The total contribution will be Rs 2,350 by employee and employer towards the EPF account.

Let's understand this with an example here:

Assume an employee joined a company in April 2024 and his basic salary is Rs 1,5000. The total EPF contribution for April will be Rs 2,350. No interest will be paid by the EPF scheme for April month.

For May, the total EPF contribution will be Rs 4,700 (Rs 2,350+Rs 2,350). The interest on this will be Rs 32.31 (Rs 4,700*0.689%). This calculation will go on till the employee retires.

How much pension will you get on Rs 15,000 basic salary?

Monthly salary (Basic+DA)= Rs 15,000
Contribution towards EPF- 12% of basic salary
Current age- 25 years

Then your total invested amount will be Rs 10,15,416. The interest will be Rs 50,37,234. You will get a total amount of Rs 60,52,650.

The calculation is based on a current interest rate of 8.25 per cent which may change in the future. The actual returns may vary due to leap year also.