EOBI Contribution Rates & Calculation. If you’re working in Pakistan, understanding EOBI contribution rates and calculation for 2026 is essential for checking your salary deductions and planning a secure retirement. This guide breaks down the official EOBI formula, contribution split, and pension calculation in a clear, practical way.
What Is EOBI and Why It Matters in 2026
The Employees’ Old-Age Benefits Institution (EOBI) is Pakistan’s statutory pension system designed to provide financial security after retirement. Under the EOB Act, both employers and employees are legally required to contribute every month.
In 2026, EOBI calculations are directly linked to the government-notified minimum wage, not your gross or basic salary. This distinction is critical and often misunderstood by employees and HR departments.
EOBI Contribution Rates 2026: The 5+1 Formula
EOBI contributions follow a fixed and legally defined structure known as the 5+1 formula.
Contribution Split Explained
- Employer Contribution: 5% of the minimum wage
- Employee Contribution: 1% of the minimum wage
- Total Monthly Contribution: 6% of the minimum wage
Important: The employer must pay their 5% share separately. It cannot be deducted from the employee’s salary.
EOBI Contribution Calculation Based on Minimum Wage 2026
EOBI is not calculated on your actual salary, even if you earn more. It is calculated strictly on the statutory minimum wage set by the Government of Pakistan.
Assumed Minimum Wage for 2026
For explanation purposes, we assume the minimum wage is:
- PKR 37,000 per month
(Always verify the latest provincial notification)
Monthly EOBI Contribution Table (2026)
| Description | Rate | Monthly Amount (PKR) |
|---|---|---|
| Employer Share | 5% of 37,000 | 1,850 |
| Employee Share | 1% of 37,000 | 370 |
| Total Deposit | 6% | 2,220 |
This amount is deposited every month into your EOBI account, creating your long-term pension entitlement.
How to Calculate Your EOBI Pension in 2026
While contribution rates are fixed, your retirement pension depends on two variables:
- Average Monthly Wage
- Years of Insurable Service
Official EOBI Pension Formula
Monthly Pension=50(Average Monthly Wage)×(Years of Service)
Key Components Explained
- Average Monthly Wage: Average of the last 12 months’ insurable wages
- Years of Service: Total eligible service period under EOBI
- 50: Constant factor defined by EOBI law
Example Pension Calculation
If:
- Average Monthly Wage = PKR 40,000
- Years of Service = 25 years
5040,000×25=PKR 20,000 per month
This amount becomes your monthly pension after retirement.
Minimum Pension Rule (2026 Update)
If your calculated pension is lower than the official minimum pension, EOBI automatically upgrades it.
- Example Minimum Pension: PKR 10,000
- If your formula-based pension = PKR 8,500
- EOBI Pays: PKR 10,000
This ensures a basic standard of living for retired workers.
Important EOBI Rules Employers and Employees Must Know
Understanding these rules helps avoid illegal deductions and compliance issues.
1. No Over-Deduction from Employees
- Maximum deduction allowed from employee salary: 1% only
- Employer must pay the remaining 5% themselves
2. Late Payment Penalties
- 2% monthly penalty on unpaid contributions
- Applies to employers only
- Accumulates quickly if ignored
3. Contract & Part-Time Workers
Even if a worker is:
- Contract-based
- Part-time
- Daily-wage
If they qualify as an “employee” under the EOB Act, EOBI contribution is mandatory.
How Employers Pay EOBI Contributions in 2026
EOBI payments are processed digitally through the PRCP system.
Step-by-Step Payment Process
- Login to EOBI Employer Portal
- Update Employee List for the month
- Generate Challan via PRCP
- Pay Through Approved Channels
Available Payment Methods
- National Bank of Pakistan (NBP)
- Bank Alfalah
- Online Banking
- JazzCash
- EasyPaisa (via 1-Bill)
Common EOBI Mistakes to Avoid
- Calculating EOBI on gross salary
- Deducting employer’s 5% from employees
- Skipping part-time employees
- Ignoring penalties and arrears
Avoiding these errors protects both employers and workers legally and financially.
FAQs
Is EOBI calculated on basic salary or minimum wage?
EOBI is calculated strictly on the government-notified minimum wage, not basic or gross salary.
Can an employer deduct 6% EOBI from salary?
No. Only 1% can be deducted from the employee. The remaining 5% is the employer’s responsibility.
What is the EOBI contribution rate in Pakistan for 2026?
The total EOBI contribution rate for 2026 is 6% of the minimum wage (5% employer + 1% employee).
How many years are required for EOBI pension?
A minimum of 15 years of insurable service is generally required to qualify for pension benefits.
Conclusion
Understanding EOBI contribution rates and calculation for 2026 empowers you to verify salary deductions, ensure employer compliance, and estimate your retirement income accurately. The 5+1 formula, minimum wage linkage, and pension calculation method make EOBI predictable if you know the rules.
