EPFO Pension Scheme: Will Basic Salary Cap Stay in Place?
EPFO updates its EPS-95 scheme stating no plans to modify the basic salary cap which benefits lower-paid workers, even as calls grow for higher pensions and including dearness allowance.
Highlights
- •EPS-95 Scheme Update
- •Basic Salary Cap Stays Intact
- •Regulations on Contributions
- •Demand for Increased Pensions
Prime Minister Manish Mandaviya has just clarified that the Employees' Pension Scheme (EPS-95) will not see any changes to its basic salary cap, which currently stands at Rs 15,000. This clarification was made during a response in Parliament on March 30, 2026, in reply to MP Giridhari Yadav's query about the potential modifications.
EPS-1995 operates as a defined contribution-defined benefit scheme where employees and employers contribute 8.33% and 1.16% of salary into pension funds respectively, with the government matching up to Rs 15,000 in contributions. This cap ensures that higher-paid workers do not see significantly increased benefits beyond this threshold.
EPS Reforms and Current Regulations
Regulations have been tightened since September 1, 2014, preventing new entrants to EPS from earning more than Rs 15,000. This means that current pension fund rules favor those who joined before the cap was implemented in a bid to standardize contributions and benefits.
Despite these recent clarifications, there remains a growing demand for raising the minimum pension payout which has not changed since 2014. Currently fixed at Rs 1,000 per month, many are now pushing for an increase to around Rs 7,500-9,000, along with inclusion of dearness allowance (DA).
