What is the formula for pension salary?

The formula for calculating pension salary under the Employees' Pension Scheme (EPS) in India is (Pensionable Salary × Pensionable Service) / 70

• Where Pensionable Salary refers to the average of the basic salary plus dearness allowance (DA) earned in the last 60 months (5 years) of service before retirement.
• The maximum pensionable salary is capped at ₹15,000 per month as per current government rules. Pensionable Service denotes total eligible years of service after November 15, 1995.

For example, if the pensionable salary is ₹15,000 and pensionable service is 30 years, the monthly pension would be:

Monthly Pension = (15,000× 30) / 70 = Approximately ₹6,429

This formula determines the monthly pension paid post-retirement.

For general retirement planning (outside EPS), where you estimate how much corpus you need to accumulate, the common formula used is:

FV=PV×(1+r)nFV=PV×(1+r)n

where FVFV is the future corpus value, PVPV is your current savings or investments, rr is the expected annual rate of return, and nn is the number of years until retirement. You can use the Pension Calculator to understand the formula of calculating your pension salary.