Almost nobody who has EPF EPS and EDLI deducted from their salary can say what the three letters after the first one stand for, which is a shame, because one of them is life insurance that costs the employee nothing and pays up to ₹7 lakh. A single deduction line funds a savings account, a pension and a death benefit, governed by three different schemes with three different rulebooks and three different sets of caps.
This guide separates them, shows the arithmetic, and deals with the question the recent ceiling change has left hanging.
One deduction, three destinations
The employee contributes 12 per cent of basic pay plus dearness allowance and all of it goes to EPF. The employer contributes 12 per cent as well, but the employer’s share is split between EPF and the pension scheme. EDLI is funded separately by the employer on top.
| Paid by | Rate | Amount | Goes to |
|---|---|---|---|
| Employee | 12% of Basic + DA | ₹3,000 | EPF only |
| Employer | 8.33% of Basic + DA | ₹2,082.50 | EPS (pension) |
| Employer | balance of its 12% | ₹917.50 | EPF |
| Employer | 0.5% of Basic + DA | ₹75 (capped) | EDLI (insurance) |
Computed at the ₹25,000 ceiling. 8.33% of ₹25,000 = ₹2,082.50; the employer’s EPF share is the remainder of its 12%, i.e. ₹3,000 − ₹2,082.50 = ₹917.50. The EDLI figure is subject to a statutory monthly cap of ₹75 — see the section on that cap below.
EPF: the part that compounds
The Employees’ Provident Fund is the savings pot. Both sides pay into it, it earns a rate declared annually, and the balance is yours.
| Measure | Detail |
|---|---|
| Rate for FY 2025–26 | 8.25 per cent |
| Declared at | 239th meeting of the Central Board of Trustees |
| Chaired by | Union Labour and Employment Minister Mansukh Mandaviya |
| Notified on | 1 July 2026 |
| Notification reference | INV-11/2/2021-INV/E-41960/2519 |
| Credited under | Para 60(1) of the EPF Scheme, 1952 |
| Members affected | More than 7 crore |
The rate is set by the Central Board of Trustees and then requires approval from the Ministry of Labour and Employment before notification. 8.25 per cent is the third consecutive year at the same rate.
Two things about that rate are worth stating plainly. It is declared in arrears, so the figure for a financial year is notified months after that year ends — the 2025–26 rate landed in July 2026. And it is a declared rate rather than a guaranteed one: it depends on what EPFO earned, and the Board has reduced it in the past.
EPS: the pension with a formula, not a balance
This is where most confusion lives. The Employees’ Pension Scheme does not work like a savings account. You cannot see a balance and you do not get back what went in. What you get is a monthly pension calculated by formula.
(Pensionable salary × Pensionable service) ÷ 70
EPS pension formula
| Condition | Requirement |
|---|---|
| Minimum service | 10 years of eligible service |
| Normal pension age | 58 |
| Minimum monthly pension | ₹1,000 |
| Pensionable salary | Average of the last 60 months of pensionable wages |
| Funded by | Employer’s 8.33%, plus a government contribution of 1.16% of wages |
| Pensioners currently drawing | About 82 lakh |
The ten-year threshold is a cliff, not a slope: a member with nine years of service does not receive a reduced pension under this formula. The 60-month averaging rule is why a change in the wage ceiling takes five years to show up fully in a pension.
The sixty-month averaging rule is the single most consequential detail here and the one most often left out. Because pensionable salary is an average of the final five years, any increase in the ceiling only reaches its full effect for someone whose last five years are entirely at the higher figure. Someone retiring in two years gets a small fraction of the benefit. Someone starting work today gets all of it.
EDLI: the insurance nobody claims
The Employees’ Deposit Linked Insurance Scheme dates to 1976 and was substantially rewritten by the EDLI (Amendment) Scheme, 2021, which took effect on 28 April 2021. It pays a lump sum to the nominee or legal heir if a member dies while in service.
| Component | Rule | Maximum |
|---|---|---|
| Wage component | 35 × average monthly wage of the last 12 months | ₹5,25,000 (wage capped at ₹15,000) |
| Balance component | 50% of average EPF balance of the last 12 months | ₹1,75,000 |
| Floor | Applies regardless of wage or balance | ₹2,50,000 |
| Ceiling | Total benefit cannot exceed | ₹7,00,000 |
Computed: 35 × ₹15,000 = ₹5,25,000, plus the ₹1,75,000 balance cap, equals exactly ₹7,00,000. The ceiling is not an arbitrary round number — it is precisely what the formula produces when both internal caps bind.
Eligibility requires twelve months of continuous service before death, with a permitted gap of up to sixty days between jobs. Note what the wage cap means in practice: a member earning ₹15,000 and a member earning ₹80,000 receive the same wage component, because everything above ₹15,000 is disregarded in that half of the formula.
What the ₹25,000 ceiling changed, and what it did not
On 17 September 2026 the mandatory coverage ceiling rose from ₹15,000 to ₹25,000 — a change we covered in detail when the Cabinet approved it and the gazette notification followed within a day. The distinction that matters for this guide is between what goes in and what comes out.
| Item | Where the number lives | Changed by the new ceiling? |
|---|---|---|
| Employee 12% contribution | Percentage of ceiling wage | Yes — ₹1,800 to ₹3,000 |
| EPS 8.33% contribution | Percentage of ceiling wage | Yes — ₹1,250 to ₹2,082.50 |
| EDLI ₹15,000 wage cap | Hard figure in the EDLI Scheme | Not automatically |
| EDLI ₹7 lakh ceiling | Hard figure in the EDLI Scheme | Not automatically |
| EPS pensionable salary cap | Provision of the EPS, 1995 | Requires scheme amendment |
Contributions are defined as percentages of the wage ceiling, so they move with it by construction. The EDLI figures are rupee amounts written into the scheme text and do not move unless that text is amended.
Computed as (35 × wage cap) + ₹1,75,000. The second bar is a conditional scenario, not a current entitlement, and is shown here only because the figure is circulating widely without that qualification.
The ₹75 detail nobody has mentioned
EDLI is funded by the employer at 0.5 per cent of wages, subject to a monthly cap of ₹75. That cap is not arbitrary either: 0.5 per cent of ₹15,000 is exactly ₹75. Cap and ceiling were aligned by construction, so for a member at the old ceiling the employer was paying the full half per cent.
| Wage | Arithmetic | Effective rate |
|---|---|---|
| ₹15,000 | ₹75 ÷ ₹15,000 | 0.50% |
| ₹25,000 | ₹75 ÷ ₹25,000 | 0.30% |
Our own calculation. If the ₹75 monthly cap is left unamended while the wage ceiling rises, the employer’s effective EDLI cost falls from half a per cent of wages to three-tenths of a per cent.
Analysis, labelled as such: this is a small number attached to a real question. If the ₹75 cap stays while the ceiling rises, employers fund the same insurance pool from a smaller effective rate — which is an argument for leaving the ₹7 lakh benefit cap where it is. If the government intends cover to rise to ₹10.5 lakh, the funding side almost certainly has to move as well. Watching what happens to the ₹75 is a reasonable way to guess which way the benefit cap will go.
What changed for families in December 2025
The second of those is the quietly significant one. A family whose earner changed jobs with a six-week gap eleven months before dying could previously be told the continuous-service condition was not met. That is now fixed.
What this guide does not tell you
Final Verdict
Read together, EPF EPS and EDLI are a reasonable package and a badly explained one. EPF is a genuine savings product paying 8.25 per cent with an employer match, which no retail instrument matches. EPS is a formula-driven pension with a hard ten-year cliff and a five-year averaging window that most members discover only at retirement. EDLI is free life cover of up to ₹7 lakh that a large share of the families entitled to it never claim, because nobody ever told them it was there.
The practical conclusions are three. Check whether your nominations are current, because both EPS and EDLI pay to nominees and the commonest failure in this system is a death benefit that nobody claims. Understand that the ten-year EPS threshold is a cliff — if you are at nine years and considering a move outside EPF coverage, that year is worth more than it looks. And treat the ₹10.5 lakh insurance figure with caution until the EDLI scheme text is actually amended, because at the moment it is arithmetic about a hypothetical rather than a description of your cover.
The ceiling went up on 17 September. What you pay went up the same day. What your family would receive has not changed yet, and that gap is the most important thing in this guide.
Frequently asked
- What is the difference between EPF, EPS and EDLI?
- EPF is a savings pot that earns interest and belongs to you. EPS is a pension paid by formula from age 58, requiring ten years of service. EDLI is life insurance paying up to ₹7 lakh to your nominee if you die in service. All three are funded from the same payroll deduction, but only EPF has a balance you can see.
- What is the EPF interest rate for 2025-26?
- 8.25 per cent. It was declared at the 239th meeting of the Central Board of Trustees chaired by Labour Minister Mansukh Mandaviya, and notified on 1 July 2026 under reference INV-11/2/2021-INV/E-41960/2519. It is the third consecutive year at that rate.
- How much does EDLI pay and who pays for it?
- Up to ₹7 lakh, with a floor of ₹2.5 lakh for members with twelve months of continuous service. The employee pays nothing — the employer funds it at 0.5 per cent of wages, capped at ₹75 a month. The formula is 35 times the average monthly wage (wage capped at ₹15,000) plus 50 per cent of the average EPF balance (capped at ₹1.75 lakh).
- Did the ₹25,000 wage ceiling raise EDLI cover to ₹10.5 lakh?
- Not automatically, and not yet. The ₹10.5 lakh figure is what the formula would produce if the EDLI wage cap were raised to ₹25,000 (35 × 25,000 + 1,75,000 = 10,50,000). But the ₹15,000 wage cap and the ₹7 lakh ceiling are rupee figures written into the EDLI Scheme and require a separate amendment, which had not been notified at the time of writing.
- How many years do I need for an EPS pension?
- Ten years of eligible service, with pension payable from age 58. It is a cliff rather than a slope — nine years of service does not produce a reduced pension under the standard formula. The minimum monthly pension is ₹1,000.
- What happens if someone dies before completing 12 months of service?
- Under a December 2025 amendment, members who die before completing twelve months of continuous service and whose average PF balance is below ₹50,000 are guaranteed a minimum of ₹50,000. Separately, weekends, holidays and gaps of up to two months between EPF-covered jobs no longer count as a break in continuous service.
