Pension Calculation Formula: EPS, NPS and APY Explained

To calculate your pension in India, work out each source separately: EPS pays pensionable salary × service ÷ 70 a month from age 58, NPS pays whatever annuity your corpus buys at retirement, and Atal Pension Yojana pays a fixed ₹1,000 to ₹5,000 a month that you choose when you join. Add these together, compare the total with your expected expenses after inflation, and you have a realistic answer to "how much pension will I get". This guide gives the formulas and worked examples as of October 2026.

Pension sources at a glance

If you are still deciding where to save, our comparison of EPF vs PPF vs NPS covers returns, lock-ins and tax.

EPS pension calculation formula

Of your employer's 12% EPF contribution, 8.33% of wages up to the wage ceiling goes to the Employees' Pension Scheme, and the Central Government adds 1.16%. EPS is not a balance that grows; it buys you a monthly pension based on this formula:

Monthly pension = Pensionable salary × Pensionable service ÷ 70

• Pensionable salary: the average monthly basic pay plus dearness allowance over the last 60 months before you exit the scheme, capped at the wage ceiling.
• Pensionable service: the years of service for which EPS contributions were made, carried across jobs under the same UAN. A two-year weightage is generally added if you retire at 58 with 20 or more years of service.
• Eligibility: at least 10 years of eligible service for a monthly pension. Normal pension starts at 58.
• Minimum pension: ₹1,000 a month, unchanged as of October 2026. Demands to raise it have not been accepted by the government so far.

What changed in 2026

• EPS 2026: The Centre notified the Employees' Pension Scheme, 2026 under the Code on Social Security, 2020, replacing EPS-95. Reports from July 2026 indicate the pension formula, the 60-month average, the 10-year rule and the ₹1,000 minimum were carried over unchanged, while the higher-pension option and faster claim settlement were formally written in.
• Wage ceiling ₹25,000: The Union Cabinet approved raising the EPFO wage ceiling from ₹15,000 to ₹25,000 a month on 16 September 2026, notified with effect from 17 September 2026. This raises the maximum employer EPS contribution from ₹1,250 to about ₹2,083 a month and the maximum pensionable salary to ₹25,000.

How service before 17 September 2026 will be valued (for example, pro-rata, as was done after the 2014 ceiling change) depends on EPFO's detailed rules. Treat any estimate using ₹25,000 as provisional until EPFO publishes them. Members who opted for the higher pension on actual salary, following the Supreme Court's 2022 judgment, have their pension worked out on salary above the ceiling.

Early and deferred pension

• Early pension: available from age 50, reduced by 4% for every year before 58. Taking it at 55 cuts the pension by 12% for life.
• Deferred pension: postponing beyond 58 (up to 60) is generally reported to raise the pension by about 4% a year.
• Less than 10 years of service: you cannot get a monthly pension, but you can withdraw an EPS amount based on a table, or take a scheme certificate to carry the service forward. See EPF when changing jobs before withdrawing, as it breaks your pensionable service.

Worked EPS examples

Neha's figure assumes her entire last-60-month average is at the new ₹25,000 ceiling, which is only possible for someone retiring after September 2031. Ravi's figure is shown without weightage; EPFO's rules for weightage on early pension should be checked.

NPS pension calculator: how the annuity works

NPS does not promise a pension amount. Your pension depends on three numbers:

1. Corpus at retirement, which depends on contributions, years and returns.
2. Annuity share: as of October 2026, after PFRDA's exit amendments notified in December 2025, non-government subscribers with a corpus above ₹12 lakh must put at least 20% into an annuity and can take up to 80% as a lump sum. Only 60% of the corpus has been confirmed as tax-free, so many people annuitise 40%. Smaller corpuses have different rules; see NPS exit and annuity options.
3. Annuity rate, quoted by PFRDA-empanelled insurers at the time you buy, and locked for life. It varies with age, the annuity type and interest rates.

Monthly NPS pension = Corpus × Annuity share × Annuity rate ÷ 12

Worked NPS example (illustrative)

Suresh, 30, invests ₹5,000 a month in NPS until 60. Assuming a 9% annual return (illustrative, not guaranteed), his corpus at 60 is about ₹91.5 lakh.

With the 40% choice, he also gets ₹54.9 lakh as a tax-free lump sum. If that money is invested and he withdraws 4% a year, it adds about ₹2,19,600 a year, or ₹18,300 a month. Annuity income is taxable at your slab rate. To project your own corpus, use the retirement calculator.

Atal Pension Yojana: fixed pension

APY is the simplest to calculate because the pension is fixed: ₹1,000, ₹2,000, ₹3,000, ₹4,000 or ₹5,000 a month from 60, guaranteed by the government. You choose it when you join, and your monthly contribution depends on your joining age. For example, joining at 25 costs ₹376 a month for the ₹5,000 pension, and joining at 35 costs ₹902 a month. You can join only between 18 and 40, and since 1 October 2022, people who are or have been income-tax payers cannot join. The full contribution chart is in our Atal Pension Yojana guide.

A simple way to estimate your total retirement income

1. List each pension source and calculate it with the formulas above.
2. Add income from savings: a sustainable withdrawal of about 3.5% to 4% a year from your retirement corpus is a common rule of thumb, not a guarantee.
3. Convert to today's money: divide the future amount by (1 + inflation)^years. At 6% inflation, prices rise about 5.74 times in 30 years.
4. Compare with expenses: if the total in today's money is below your expected monthly spending, increase savings or retire later.

Combined example (illustrative)

Suresh (above) has also been in EPF since 23 and will have 35 years of service at 58.

In today's money at 6% inflation over 30 years, that is only about ₹8,000 to ₹8,900 a month (₹46,054 ÷ 5.74 and ₹51,339 ÷ 5.74). Pensions alone are unlikely to be enough for most salaried people, which is why our guide on how much money you need to retire recommends building a separate corpus in EPF, PPF and mutual funds. The inflation calculator shows how much your current expenses will cost in future.

Key takeaways

• EPS pension = pensionable salary × service ÷ 70, from 58, with at least 10 years of service and a ₹1,000 minimum.
• The EPFO wage ceiling rose to ₹25,000 from 17 September 2026; how earlier service is counted awaits EPFO's detailed rules.
• NPS pension = corpus × annuity share × annuity rate; non-government subscribers must annuitise at least 20% of a corpus above ₹12 lakh.
• APY gives a fixed ₹1,000 to ₹5,000 a month from 60, only for non-taxpayers who join between 18 and 40.
• EPS and most annuities are not inflation-linked; always convert your estimate to today's money before deciding it is enough.