The Union Cabinet has raised the wage ceiling for mandatory coverage under the Employees’ Provident Fund Organisation (EPFO) to Rs 25,000 per month from Rs 15,000. According to the government, this move is expected to bring more than 51 lakh additional employees under mandatory EPFO coverage. According to Information and Broadcasting Minister Ashwini Vaishnaw, this will significantly widen social security protection for workers.ย
“At present, a fresh employee joining employment at a wage above Rs 15,000 per month is not automatically covered under the EPF framework and may remain outside mandatory provident fund, pension and associated insurance protection. Raising the ceiling to Rs 25,000 will bring a substantial segment of employees in the Rs 15,000โ Rs.25,000 wage band within the statutory social security framework,” the government said in a release.
What changes for those already earning above Rs 25,000
According to Sriram V, CHRO, BankBazaar, for existing employees whose basic salaries are already above Rs 25,000, contributions will now be calculated against the higher ceiling, which increases their overall retirement savings while marginally adjusting their monthly take-home pay
How much more theseย salaried employees may have to contributeย
“Raising the EPF wage ceiling to Rs 25,000 will shift their capped monthly contribution from Rs 1,800 (12 per cent of Rs 15,000) to Rs 3,000 (12 per cent of Rs 25,000),” said Sriram V.ย
“Though this Rs 1,200 shift marginally reduces immediate take-home pay, employers hold a moral responsibility to protect take-home structures while helping employees secure a robust retirement corpus,” he added.ย
Across employee categories, the main implication is a healthy, structured shift toward higher savings, supported by matching employer contributions.ย
When was the last wage ceiling increased?
The EPFO wage ceiling remained unchanged from 2004 to 2014, before being substantially increased to Rs 15,000 in September 2014.ย
Additional expenditure of Rs 11,339 crore
The government will bear an additional expenditure of Rs 11,339 crore to implement this scheme. The estimated expenditure over five years is approximately Rs 56,696 crore. The existing annual budgetary support is about Rs 10,250 crore.ย
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