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Private Sector Pension Boost: New Salary Limit Could Increase Monthly Payouts by 66.6%
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News18•25-09-2026, 14:41
Private Sector Pension Boost: New Salary Limit Could Increase Monthly Payouts by 66.6%
- •The government has increased the monthly salary limit for EPF and EPS from Rs. 15,000 to Rs. 25,000, potentially boosting pensions.
- •The new limit could lead to a substantial increase of up to 66.6% in the monthly pension amount for private sector employees.
- •EPFO's pension calculation formula is: Monthly Pension = Pensionable Salary × Pensionable Service Period ÷ 70.
- •Employees with 20 years or more of service receive an additional 2 years of 'service bonus' for pension calculation.
- •For example, an employee with 20 years of service and a Rs. 25,000 limit could see their pension increase from Rs. 4,714 to Rs. 7,857.
Key Questions Answered
Monthly pension is calculated using the specific EPFO formula: Monthly Pension equals the Pensionable Salary multiplied by the Pensionable Service Period, divided by 70.
To qualify for a pension, an employee must complete at least 10 years of qualifying service. Additionally, the pension is generally available starting from the age of 58, though an early pension can be availed from the age of 50 with a percentage reduction.
According to EPFO rules, if an employee has served for 20 years or more, the government provides an additional 2 years of service bonus, which is added to the total service period for pension calculations.
