Employees’ Pension Scheme, 1995 for APFC 2026: Pension Formula, Eligibility, Family Pension, Traps & 10 MCQs
Current-law checkpoint
The Employees’ Pension Scheme (EPS) was framed in 1995 under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and took effect on 16 November 1995, replacing the Employees’ Family Pension Scheme, 1971. The Code on Social Security, 2020 came into force on 21 November 2025 and carries the EPF, pension and EDLI schemes forward under its provident fund chapter. The core pension rules below (formula, 10-year rule, ages and family pension) are what the APFC paper tests. Before the exam, check the latest scheme text on the EPFO website for any renumbering or notified change.
EPS at a glance
EPS is a defined-benefit pension. Your pension does not depend on how much sits in your pension account; it depends on a formula built from your salary and your years of service. That is the single idea most aspirants miss, and it explains why the exam loves formula questions.
| Feature | Position |
|---|---|
| Funding | 8.33% of wages from the employer’s 12% share, plus 1.16% from the Central Government |
| Wage ceiling | ₹15,000 a month from 1 September 2014 (earlier ₹6,500), so the normal maximum contribution is ₹1,250 |
| Employee’s own contribution to EPS | Nil; the employee’s 12% goes entirely to EPF |
| Minimum service for monthly pension | 10 years of eligible service |
| Normal pension age | 58 years |
| Minimum pension | ₹1,000 a month (from 1 September 2014) |
The pension formula, step by step
Pensionable salary
For service after 1 September 2014, pensionable salary is the average monthly pay of the last 60 months before exit, capped at the wage ceiling for ordinary members. Earlier, it was the average of the last 12 months. An option that says “last drawn salary” is wrong.
Pensionable service
- Count the total years of contributory service, adding up service across jobs if you carried it forward with a scheme certificate or transfer.
- A part of a year of six months or more rounds up to a full year; less than six months is ignored.
- If you retire at 58 with 20 years or more of service, a bonus of 2 years is added.
With a ₹15,000 ceiling, the commonly cited maximum is (15,000 × 35) ÷ 70 = ₹7,500 a month.
Two solved examples
Example 1: normal pension at 58
Ravi retires at 58 after 22 years 7 months of service. His average pay over the last 60 months, capped, is ₹15,000.
The seven months round up, so his service is 23 years. Because he has more than 20 years, add the 2-year bonus, which makes 25 years. His pension is (15,000 × 25) ÷ 70 = ₹5,357.14, or about ₹5,357 a month.
Example 2: early pension at 52
Meena leaves at 52 with 14 years of service and a formula pension of ₹3,000. She takes early pension, which is cut by 4% for each year she falls short of 58. She is 6 years short, so the cut is 24%, and her pension is 3,000 × 0.76 = ₹2,280 a month. She gets no 2-year bonus, because she has less than 20 years and is not retiring at 58.
Early, normal and deferred pension
| Situation | Rule |
|---|---|
| Exit before 50 with 10+ years | No pension yet; take a scheme certificate and claim later |
| Age 50 to 58 with 10+ years | Early (reduced) pension, 4% less for each year short of 58 |
| Age 58 with 10+ years | Full superannuation pension |
| Deferring beyond 58 | May defer up to 60; pension goes up about 4% for each year deferred |
| Less than 10 years at exit | Withdrawal benefit under Table D, or a scheme certificate to carry service forward |
The forms are worth knowing for statement questions. Form 10C is used for a withdrawal benefit or a scheme certificate, and Form 10D is used to claim a monthly pension. Pensioners file an annual life certificate, which can be done digitally through Jeevan Pramaan.
Family, orphan and disablement pension
This is where the 10-year rule does not apply. If a member dies while in service, the family gets pension even if only one month’s contribution was paid. The same is true for a member who becomes permanently and totally disabled during service.
| Beneficiary | Entitlement |
|---|---|
| Widow or widower | Monthly pension for life (the base amount for the rows below) |
| Children | 25% of the widow pension each, for up to 2 children at a time, until age 25 |
| Orphans | 75% of the widow pension each, for up to 2 orphans at a time, until age 25 |
| Disabled child | 75% of the widow pension for life |
| No family | Pension to the nominee, or to a dependent parent |
The higher-pension verdict (2022)
On 4 November 2022, the Supreme Court in EPFO v. Sunil Kumar B. largely upheld the 2014 amendment to EPS, including the ₹15,000 ceiling and the 60-month average. It allowed employees who were members on 1 September 2014 and had not opted earlier to choose a pension on their actual salary above the ceiling. It also struck down the requirement for employees to pay an extra 1.16% on salary above ₹15,000. EPFO then opened an online window for joint options from employers and employees.
High-yield traps
- The divisor is 70, not 60 or 58.
- The employee pays nothing into EPS; the 8.33% comes from the employer’s share.
- Early pension starts at 50, and the cut is 4% for each year short of 58, not a flat amount.
- The 2-year bonus needs 20 years or more of service and retirement at 58.
- Death or disablement in service gives a pension without 10 years of service.
- Children’s pension is 25%, orphan pension is 75%, and both stop at 25 years of age, for two at a time.
10 practice MCQs with score analysis
Select one option per question, then press Submit to see your score, explanations and a short analysis.
FAQ
What is the EPS pension formula?
Monthly pension = pensionable salary × pensionable service ÷ 70.
How many years of service are needed for an EPS pension?
At least 10 years of eligible service for a monthly pension. Family and disablement pension do not need 10 years.
What happens if I leave with less than 10 years?
You can take the withdrawal benefit under Table D, or keep a scheme certificate and add the service to your next job.
What is the minimum EPS pension?
₹1,000 a month, in force since 1 September 2014.
Sources
- Employees’ Pension Scheme, 1995, as amended (EPFO, epfindia.gov.in)
- Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
- Code on Social Security, 2020 (Ministry of Labour and Employment)
- Supreme Court of India, EPFO v. Sunil Kumar B., judgment dated 4 November 2022