The Employees' Provident Fund Organisation (EPFO) has issued a clarification restoring the earlier “Higher Pension” option under the Employees’ Pension Scheme (EPS‑95). This means certain eligible members can again link their EPS contributions to their actual full salary instead of the previously capped amount.

This change comes after many years of confusion following a 2014 rule that capped pensionable salary, limiting the pension amount for most employees. The restoration is intended to clarify eligibility and benefit long‑term contributors who had legally opted for higher pension provisions before.

🎯 What Exactly Has Been Restored?

Before 2014, some EPFO members could choose to calculate their pension based on their actual basic salary + dearness allowance (DA) — even if it was above a fixed wage ceiling.

In 2014, this option was restricted by capping the pensionable salary at ₹15,000 per month, meaning even high‑paid employees ended up with a lower EPS payout. Now, EPFO has validated the earlier process, allowing those who had exercised the higher pension option before to continue receiving pension linked to their actual salary.

In effect, the change restores pension treatment to what many were receiving before 2014, but only for eligible employees.

👥 Who Benefits From This Restoration?

✅ Beneficiaries

✔️ Employees who joined EPS before 1 September 2014
✔️ Those who had opted for the higher pension option and contributed accordingly
✔️ Pensioners or subscribers whose employers also agreed to the higher contribution setup

These members may now receive a higher monthly pension because their pensionable salary is based on their actual wages, not the ₹15,000 cap.

❌ Who Does Not Benefit

✘ Employees who joined after September 2014
✘ Members who never opted for the higher EPS option before
✘ Those whose employers did not agree to the higher pension contribution option

For these groups, the EPS pension will still be calculated based on the capped ₹15,000 wage ceiling.

💡 Why This Matters

📈 Better Pension for a Few

For eligible members, linking pension to actual salary — especially for long careers — can significantly increase monthly pension payouts, sometimes by thousands of rupees compared to the capped calculation.

🧠 Clarifies Long‑Standing Confusion

The move clears uncertainty caused by the 2014 cap and subsequent legal issues where some employees weren’t sure if they were entitled to higher pension amounts under older rules.

📊 Limited Scope

It isn’t a blanket benefit for all — only a specific group of long‑term contributors will see this advantage. Most post‑2014 joiners remain subject to existing rules.

🧮 How EPS Pension Works (Quick Primer)

• EPS (Employees’ Pension Scheme) provides a monthly pension after retirement, based on years of service and average pensionable salary.
• The pension is funded by part of the employer’s contribution (8.33% of their EPF share).
• With the higher option restored, eligible members’ pensionable salary basis reflects actual pay instead of being capped.

🧾 Bottom Line

The EPFO has restored the higher EPS pension option, but it is not a new benefit for everyone — only those who already qualified and opted for it before the 2014 wage ceiling change will benefit. For them, it clarifies and potentially increases monthly pension payouts by using actual salary figures instead of the capped amount.

 

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