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The central government is seriously considering increasing the salary limit of EPFO from Rs 15,000 to Rs 30,000. This change can widen the scope of EPFO and provide mandatory pension and retirement security to millions of middle-income employees. Salaries increased after 2014, but due to the wage ceiling remaining the same, many employees were left out of the social security net. The government is now considering increasing the wage ceiling to Rs 30,000, on which the final decision will be taken only after discussion with the stakeholders.
New Delhi. The Central Government is seriously considering increasing the wage ceiling of EPFO from Rs 15,000 to Rs 30,000. If this change is implemented, a large number of middle-income workers will come under the ambit of mandatory EPF and pension coverage. Wage levels have increased rapidly since 2014, but there has been no update to the wage ceiling, leaving millions of workers outside the social security net.
Salary increased but no cap, lakhs of employees left out of 2014 cap
The current wage limit of EPFO was increased from Rs 6,500 to Rs 15,000 in 2014. But wages have increased significantly in urban areas over the past decade, leaving a large number of workers earning Rs 18,000 to Rs 30,000 out of the mandatory coverage. Trade unions have been demanding for a long time that EPF coverage be made more comprehensive so that retirement security of more employees can be strengthened.
Government said – Big decision will be taken only after consultation with all stakeholders
On a question asked in Parliament, the Labor and Employment Minister clarified that at present the limit of mandatory EPF coverage is still only Rs 15,000. He said that wide discussion with all stakeholders including unions, industry organizations and EPFO board is necessary to increase the limit. The government believes that such a change will economically impact both employees and employers, so it will have to be implemented thoughtfully.
If the limit is increased, more than 1 crore new employees can come under the EPF ambit.
If the limit is fixed at Rs 30,000, a large number of employees will join the EPF and pension schemes. Employees have to contribute 12 percent of the basic salary every month, while the employer also deposits an equal amount. This will increase both the retirement fund and pension, although the take-home salary may be slightly reduced. According to the internal report of the ministry, this move is likely to provide mandatory coverage to more than one crore new employees.
