Full Salary Pension Restored: Check if You Meet the EPFO Eligibility Criteria

In a significant move toward resolving years of retirement payout ambiguity, the Employees’ Provident Fund Organisation (EPFO) has restored the option for employees to link their pension contributions to their actual full salary.

However, a recent clarification issued in February 2026 confirms that this “higher pension” benefit is far from universal, applying only to a specific and limited segment of the Indian workforce.

The “2014 Cut-off” Restricts Access

The restoration primarily targets employees who had already exercised the option to contribute to the Employees’ Pension Scheme (EPS) based on their actual pay—rather than the statutory wage ceiling—prior to September 1, 2014.

Before that date, many organized sector workers, particularly in Public Sector Undertakings (PSUs), chose this route to secure a pension closer to half of their last-drawn salary.

For those who joined the EPFO after 2014 or failed to opt for higher contributions before the cap was implemented, the pensionable salary remains restricted to ₹15,000.

This effectively caps the maximum monthly pension at approximately ₹7,500, regardless of how much the individual actually earns.

EPFO Employer Consent and Financial Liability

A critical hurdle for eligible employees is the requirement of employer participation.

The EPFO has clarified that the higher pension option cannot be exercised unilaterally; the employer must agree to contribute the matching higher share.

Furthermore, switching to the higher pension requires a retrospective adjustment.

Subscribers must transfer a portion of their existing Provident Fund (PF) corpus to the Pension Fund (EPS) to cover the “contribution gap” from previous years.

While this increases the monthly pension, it simultaneously reduces the tax-free lump-sum amount available at the time of retirement.

Clarity Amid Regulatory Shifts

Officials describe the latest circular as a “restoration of a previous provision” rather than a new benefit.

It follows a series of legal battles and a 2022 Supreme Court ruling that mandated clarity for long-term subscribers.

While the move offers relief to thousands of PSU veterans, millions of private-sector workers continue to face a “pension ceiling.”

Many labor unions argue that the current cost of living makes this ceiling outdated.

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