After getting approval from the Union Cabinet on Wednesday, the EPFO wage ceiling for mandatory coverage has been raised to Rs 25,000 per month from Rs 15,000. The revision is likely to include over 51 lakh more employees in the compulsory scheme of the Employees' Provident Fund Organisation (EPFO).
Key Highlights
- EPFO wage ceiling has been increased from Rs 15000 to Rs 25000, which has been done after 12 years by the Union Cabinet.
- More than 51 lakh additional employees are expected to receive mandatory social security coverage under the revised ceiling.
The decision was made at a Cabinet briefing by Union Minister Ashwini Vaishnaw, who said the measure will bring greater social security benefits for the workers. Wage ceiling has been adjusted after 12 years. The limit was last raised in September 2014 when it was increased to Rs 15,000 per month.
Employees Earning Up to Rs 25,000 to Come Under Coverage
The hike will bring employees in the income range of Rs 15,000 to Rs 25,000 monthly income under the social security net and applicable provisions.
The broadened coverage will benefit eligible employees by allowing them to avail benefits for their provident fund savings and pension benefits as per the Employees' Pension Scheme (EPS) and insurance protection under the Employees' Deposit Linked Insurance Scheme (EDLI).
According to the government, the move is to expand social security coverage and to give workers more economic security. It also hopes that the extended coverage will help retain staff.
Why Has the EPFO Wage Ceiling Been Increased?
The EPFO wage ceiling had remained unchanged at Rs 15,000 since September 2014. Before that, the limit had stayed unchanged between 2004 and 2014.
According to the government, the latest revision takes into account sustained wage growth, rising incomes and the continued expansion of formal employment over the intervening years.
The decision was based on a proposal from the Ministry of Labour and Employment and was approved by the Union Cabinet chaired by PM Narendra Modi.
Government to Spend Rs 11,339 Crore Annually
The revised EPFO wage ceiling will increase the government's annual expenditure on the initiative to an estimated Rs 11,339 crore, compared with existing annual budgetary support of around Rs 10,250 crore.
Over five years, the estimated expenditure is expected to reach approximately Rs 56,696 crore.
Also Read: Pension Sakhis to Carry Retirement Security to Rural India's Doorstep
EPFO Coverage and Benefits
EPFO administers three key social security schemes: the Employees' Provident Fund, the Employees' Pension Scheme and the Employees' Deposit Linked Insurance Scheme.
The government expects the revised wage threshold to extend mandatory coverage to more than 51 lakh additional employees.
According to reports, EPFO currently has around 7.98 crore contributing members across approximately 7.68 lakh contributing establishments. The Employees' Pension Scheme provides pension benefits to around 82 lakh pensioners.
Earlier this month, the EPF advance withdrawal rules was revised by the Employees’ Provident Fund Organisation (EPFO), introducing new withdrawal limits and eligibility conditions for provident fund members. The changes were made aimed at helping employees access their EPF savings for essential needs such as medical treatment, education, marriage and housing.
