EPS: Employees may receive significant relief in the new year 2026. Discussions have resumed between the Employees’ Provident Fund Organization (EPFO) and the Ministry of Labor regarding a proposal to increase the basic salary limit of the Employee Pension Scheme (EPS-95) from Rs 15,000 to Rs 25,000. If approved, this proposal will directly impact the country’s more than 65 million EPFO subscribers. This could be included under EPFO 3.0—a major step toward a complete upgrade of the employees’ social security system in the future.
According to sources, the Employee Pension Scheme (EPS-95) is being reconsidered, raising the basic salary limit from Rs 15,000 to Rs 25,000. If this decision is passed, employees’ monthly pension fund contributions will increase from Rs 1,250 to Rs 2,083. This could be included under the new EPFO, ‘EPFO 3.0,’ and a major update could be expected in early 2026.
According to the current rules, contributions to the pension fund under EPS-95 are only counted up to a maximum of Rs 15,000 of your basic salary. This means that even if your salary is Rs 30,000 or Rs 40,000, the pension fund contribution is limited to only Rs 15,000. Both the employee and the employer contribute 12%. Of this, the employer’s 8.33% goes to the pension fund (EPS), but this contribution is limited to a basic Rs 15,000—so only Rs 1,250 is deposited into the EPS each month.
What will change if the limit is increased?
If this proposal from the EPFO and the Ministry of Labor is approved, the basic salary limit will be raised to Rs 25,000. This means that EPS contributions will now be calculated on Rs 25,000—and then at the rate of 8.33%:
Rs 25,000 × 8.33% = Rs 2,082.50 (Rounded off Rs 2,083)
This means that you will now deposit Rs 2,083 per month instead of Rs 1,250. This means your pension fund will increase by 66%. See the difference—approximately Rs 833 more will be deposited into EPS each month. This will directly impact your retirement pension, as pension calculations are based on the formula “Years of Service × Average Basic Salary × 70/100.”
Who will benefit from this decision?
EPFO has over 65 million active subscribers nationwide. If this proposal is approved, it will benefit all segments—private sector employees, EPF members working in small industries, and, in the future, EPS-95 pensioners. Overall, monthly contributions will increase, and in the long run, the monthly pension amount will also increase.
