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EPFO News- According to the current rules, it is necessary to include employees getting basic salary up to ₹ 15,000 in EPF and EPS. Employee organizations have been demanding to increase the salary limit for a long time. He says that due to rising inflation the old limit has now become irrelevant.
New Delhi. Employees Provident Fund Organization (EPFO) is preparing to make major changes in its rules. As of now, the salary limit for mandatory joining of EPF and EPS is ₹ 15,000 per month. The government is now considering increasing it to ₹25,000. If this happens, more than one crore employees of the country will be able to get the benefits of pension and provident fund. The salary limit was last increased from ₹6,500 to ₹15,000 in 2014.
As per the current rules, employees getting basic salary up to ₹ 15,000 are required to be included in EPF and EPS. Those earning more than this can stay out if they wish and companies also have no compulsion to add them. Because of this, many private sector employees are deprived of retirement savings.
Consideration of increasing the income limit
According to a report in Business Today, M Nagaraju, Secretary, Department of Finance Services, at an event in Mumbai, said that it is a matter of great concern that employees earning a little more than ₹15,000 do not get pension cover and become dependent on children when they grow old. According to Nagaraju, it has now become mandatory to update the outdated rules according to the current income and expenditure.
What will be the benefit of increasing the income limit?
If EPFO increases the salary limit to ₹25,000, the Central Board of Trustees may approve the proposal early next year. According to an estimate by the Labor Ministry, the increase in the limit by ₹ 10,000 will provide pension and provident fund benefits to more than one crore new employees. Employee organizations have also been demanding this for a long time because due to rising inflation the old limit has now become irrelevant.
Experts say that even now most people do not have any concrete arrangement for secure retirement. By increasing the EPF limit, thousands and lakhs of employees will automatically join secure savings schemes. This change will be beneficial for employees as it means higher monthly contribution, larger EPF balance and higher pension in future. At present, employees deposit 12% of their basic salary in EPF and employers also contribute the same amount. As salary increases, the contribution of both will increase.
7.6 crore employees are connected to EPFO
Costs for employers will certainly increase, but the move is being seen as a way to strengthen employee welfare and financial security. EPFO already manages a sum of ₹26 lakh crore and has 7.6 crore active members. If the limit is increased, the scope of pension cover will become much larger. This could prove to be one of the biggest social security reforms in the last ten years.
