The Employees’ Provident Fund Organisation (EPFO) is reportedly considering a major change that could benefit more than one crore salaried employees. The government may increase the salary ceiling for mandatory Provident Fund (PF) and pension contributions from the current ₹15,000 to ₹25,000 per month.
The wage limit was earlier ₹6,500 and is used to determine who is automatically covered under the Employees’ Provident Fund (EPF) and Employees’ Pension Scheme (EPS). Raising the cap would bring a large number of workers—especially those earning slightly above ₹15,000—under formal social security coverage.
During an event in Mumbai, Department of Financial Services (DFS) Secretary M. Nagaraju said it is a matter of concern that many workers who earn just above the current limit are excluded from pension benefits and often depend on family support in old age. He stressed the need to revise outdated pension thresholds.
Current Rules
At present, only employees earning up to ₹15,000 in basic salary are mandatorily covered under EPF and EPS. Those earning above this limit can be excluded, and employers are not obligated to register them, leaving many private-sector employees without retirement savings.
Proposed New Limit
Reports suggest the EPFO may increase the salary ceiling to ₹25,000. The proposal is expected to be discussed by the Central Board of Trustees early next year. According to Labour Ministry data, raising the limit by ₹10,000 could bring more than one crore additional workers into the social security net. Trade unions have long demanded this revision, arguing that the current cap does not reflect rising living costs.
Impact on EPFO Funds
If approved, employees and employers will contribute more each month, boosting employees’ PF balances and increasing future pension benefits. Currently, both contribute 12% of the basic salary, with the employer’s share split between EPF and EPS. A higher salary base automatically raises the contribution amount. For employers, this would slightly increase the per-employee cost.
Why the Change Matters
The government aims to strengthen India’s social security system. While schemes like the Atal Pension Yojana have seen strong enrolment—over 8.3 crore subscribers—India still has a large gap in retirement planning. A majority of Indians lack life insurance, and many young workers have insufficient long-term savings. Increasing the EPF salary cap is expected to improve retirement security for millions.
How EPF Contributions Work Today
- Employees contribute 12% of their salary to their PF account.
- Employers also contribute 12%, divided as:
- 8.33% to the pension scheme (EPS)
- 3.67% to EPF
If the salary cap rises, contributions to both EPF and EPS will increase, helping employees build a larger retirement corpus and enjoy better pension benefits.