Are you about to make this mistake?: This one EPS error could cost you lakhs in lost pension

Your EPS pension might not make you rich—but if you start it too early, it could leave you poorer. That’s the core message retirement planners are stressing, as more salaried professionals discover that delaying their pension by just a couple of years can mean earning thousands more per month—for life.

Under the Employees’ Pension Scheme (EPS), eligible employees can start drawing pension as early as age 50. But early retirement comes at a steep price: the monthly payout is reduced by 4% for every year before 58. On the flip side, deferring the pension to age 60 increases the payout by 4% per year, resulting in a total 8% boost.

The formula, put together by wealth advisory firm fynprint, is straightforward:

• Monthly Pension = (Pensionable Salary × Pensionable Service) ÷ 70
• Note: Pensionable salary is capped at ₹15,000, regardless of actual salary.

Let’s assume 25 years of service. With the EPS rule, 2 additional bonus years are added, making 27 years of pensionable service.

Here’s how timing impacts your monthly payout:

Start at 50 (Early Exit): ₹3,934/month (with 32% reduction)

Start at 58 (Standard Payout): ₹5,785/month

Start at 60 (Delayed Payout): ₹6,248/month (with 8% bonus)

That’s a difference of over ₹2,300 per month between starting at 50 vs 60—a gap that adds up significantly over retirement.

Experts say EPS should not be relied on as the primary retirement income source. Lakshmi Srinivasan, a retirement planner, notes that EPS usually covers less than 10% of one’s monthly expenses. “But timing it well still makes a difference,” he says.

The default age for EPS pension is 58, but unless you urgently need cash or face a health issue, waiting until 60 gives the best return from the system.

How to apply for EPS Pension:

Submit Form 10D via the EPFO portal or through your employer

Provide KYC and bank account details

Once approved, the pension is credited monthly to your account

EPS alone won’t fund your retirement—but timing your pension right can give you that little extra cushion when you need it most.