The central government has notified Employees' Pension Scheme (EPS), 2026, under the Code on Social Security, 2020, replacing the older EPS-95 and EPS-1971 frameworks. According to latest reports, EPS-95 has been abolished as the legal framework but existing entitlements continue without interruption. The new scheme introduces a 20-day claim settlement deadline with mandatory deficiency notices, replacing the previous system that had no statutory deadline. If documents are missing, applicants must be informed within the same 20-day window, with 12% annual interest penalty on delayed amounts without sufficient reason. This represents a significant operational upgrade from the previous framework. The scheme applies to employees who become members of the Employees' Provident Funds Scheme, 2026, on or after June 29, 2026, provided their wages are within the government-notified wage ceiling. Existing EPF subscribers covered under EPS-95 or the earlier Family Pension Scheme will automatically continue under the new framework without requiring fresh enrolment.
The revised rules require the EPFO to process provident fund withdrawal, pension and deposit-linked insurance claims within 20 days, provided the claimant has furnished all required details. Officials could face financial consequences for unnecessary delays, with interest at the rate of 12% per annum becoming payable on pending benefits if the Commissioner fails to meet the deadline without reasonable grounds. According to a senior Labour Ministry official quoted by PTI, penal interest for delayed settlements is not a new concept but the latest rules replace the variable rate linked to EPF returns with a flat 12% annual penalty. The notification says this sum can be recovered from the Commissioner's salary. Strengthening digital compliance is among the principal goals of the newly notified rules, with the measures intended to encourage both employers and the EPFO to rely more heavily on online processes, reducing delays for members.
The Employees' Pension Scheme, 2026 retains the existing pension calculation formula for eligible members, with the monthly superannuation or early pension calculated using the formula: Monthly Pension = (Pensionable Salary × Pensionable Service) ÷ 70. The notification states that the pension will be calculated proportionately for different wage ceiling periods, with pensionable salary for each period remaining subject to the applicable wage ceiling. Pensionable salary is the average monthly salary drawn during the 60 months immediately preceding a member's exit from the Pension Fund, calculated based on months for which pension contributions were actually received if the member has not received salary for the entire 60-month period. The scheme rewards long service, with members retiring on attaining superannuation age after completing 20 years or more of pensionable service receiving an additional two years added to pensionable service while calculating monthly pension. Members can choose to start receiving pension after attaining 50 years of age, even if they have not yet reached superannuation age, though pension amount will be reduced by 4% for every year by which it is drawn before superannuation age.
Employees who leave their job before completing 10 years of eligible service will continue to have two options under the new rules. As reported by Mint, they can either receive a withdrawal benefit as per the provisions of the scheme or obtain a Scheme Certificate, which allows the completed years of eligible service to be carried forward and added if they join another EPF-covered establishment in the future. An individual is eligible to withdraw a lump sum amount of EPS, earlier of below two situations: if the EPS member quits from their job before 10 years of completion of service, or if the member has attained 58 years of age. The minimum monthly pension remains unchanged at ₹1,000, which has been in force since September 1, 2014. The Centre has not announced any hike in the minimum monthly pension under EPS-2026, something that was highly anticipated.
Following the Supreme Court's ruling on higher pension, EPS-2026 formally incorporates the higher-pension framework into the scheme rather than leaving it as a standalone circular-driven process. For eligible members, the scheme carries forward the existing contribution framework notified after the Supreme Court judgment, now with firmer statutory backing rather than a fresh set of numbers. The employer contribution rate remains at 8.33% for most members, with higher-pension members following the existing post-Supreme Court contribution framework. Government contributions made from April 1, 2026 onward carry an assured minimum interest rate of 8.5% for pension assets invested in the Central government's Public Account. Employees who opted for the higher pension following the Supreme Court's judgment will continue under the existing higher pension provisions, with the new framework formally recognizing these provisions. The scheme also allows members who continue in employment after attaining the superannuation age to keep contributing to the Pension Fund, subject to the provisions of the scheme.
