The central government confirmed that the Employees' Pension Scheme contribution will stay at the Rs 15,000 cap, despite the new Rs 25,000 wage ceiling. In a notification dated October 15, 2026, the Ministry of Labour and Employment said this change started from September 17, 2025, to avoid a funding shortfall.
Synopsis
EPS pension: In a recent notification, the central government confirmed that the Employees' Pension Scheme contribution will remain at the current cap of Rs 15,000, despite announcing a new wage ceiling of Rs 25,000. This choice reflects findings from earlier actuarial evaluations pointing to a potential funding shortfall. Additionally, the government has promised supplementary budgetary support to ensure current pension payouts, although sustainability concerns have been voiced in Parliament.
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The central government has notified that it would continue contributing to Employees’ Pension Scheme (EPS) members’ EPS fund at the earlier wage ceiling of Rs 15,000, despite the new wage ceiling of Rs 25,000 coming into effect from September 17, 2025.
In a notification dated October 15, 2026, the Ministry of Labour and Employment said that the government’s contribution to the EPS at the Rs 15,000 wage ceiling will come into effect from September 17. The government contributes 1.16% of the basic wage of an EPS member to their EPS account.
What does the Labour Ministry’s notification say about the government’s contribution to EPS accounts?
The Ministry of Labour and Employment said in the notification that in exercise of the powers conferred by clause (b) of sub-section (1) of Section 15 of the Code on Social Security, 2020 (36 of 2020), the central government hereby makes the following amendments in the Employees’ Pension Scheme, 2026, namely:-
for the words ‘such sum as may be specified by the central government’, the words “wages up to rupees fifteen thousand (Rs 15,000/-) per month’ shall be substituted;
(ii) In the first proviso, the words ‘and the central government’ shall be omitted.
How will the new changes apply to specific EPS clauses?
Earlier, the referred EPS clause in the EPS 2026 scheme read-
The central government shall contribute to the scheme at the rate of one and sixteen hundredths per cent of the pay of the members of the Employees' Pension Scheme, limited to such sum as may be specified by the Central Government.
Provided that where the wage of the member exceeds the wage ceiling notified by the Central Government, the contribution payable by the employer and the Central Government shall be limited to the amount payable on wages up to such wage ceiling.
After the amendment, it will read-
The central government shall contribute to the scheme at the rate of one and sixteen hundredths per cent of the pay of the members of the Employees' Pension Scheme, limited to wages up to rupees fifteen thousand (Rs 15,000/-) per month.
Provided that where the wage of the member exceeds the wage ceiling notified by the central government, the contribution payable by the employer shall be limited to the amount payable on wages up to such wage ceiling.
How the government’s contribution at a Rs 15,000 wage ceiling may impact your EPS pension
The government contributes 1.16% of the basic pay of an EPS member to their EPS account with a wage ceiling of Rs 15,000.
This means the government’s maximum monthly contribution can be Rs 174 (1.16% of Rs 15,000).
Now, the government has increased the wage ceiling to Rs 25,000. If the government contributes at the new wage ceiling, the monthly contribution to the EPS account will rise from Rs 174 to Rs 290, a 66.66% increase.
But the EPS is a defined benefit scheme, where your pension is calculated based on your pensionable service and salary, so there won’t be a direct impact on your EPS pension.
However, if the government doesn’t contribute enough funds to the EPS and the scheme doesn’t generate enough funds to support pensions in the future, the government may need to bring a new policy to fill that pension gap.
Why is the government not contributing to the EPS fund at a Rs 25,000 wage ceiling?
The government didn’t reveal the reason in the notification, but in the past, on many occasions in Parliament, the government has said that it was providing EPS pension to its members in addition to the budgetary support of 1.16% of wages.
In July 2025, Ministry of Labour & Employment also clarified that the EPS fund is valued annually and as per the valuation of the fund as on March 31, 2019, there is an actuarial deficit.
In August this year, Ramvir Singh Bidhuri, a Member of Parliament, asked whether the government planned to raise the minimum EPS pension from Rs 1,000 to Rs 7,500.
Replying to his query, Shobha Karandlaje, the Minister of State for Labour and Employment, said that the government was providing a minimum pension of Rs 1,000 per month to the pensioners under the EPS by providing budgetary support, which is in addition to 1.16% of wages provided annually towards the EPS to the Employees’ Provident Fund Organisation (EPFO).