The Employees' Provident Fund Organisation (EPFO) is considering increasing the wage ceiling from the current ₹15,000 to ₹25,000 per month. This change will bring over one crore employees under the mandatory purview of EPF and EPS schemes. The final decision on the proposal may be taken at the board meeting scheduled for December or January.
PF deductions: The Employees' Provident Fund Organisation (EPFO) may soon make significant changes to its rules. According to sources, the organization is considering raising the wage ceiling for mandatory participation in EPF and EPS from ₹15,000 to ₹25,000 per month. As per the internal assessment of the Labour Ministry, this move will extend social security benefits to over one crore employees. The proposal is likely to receive approval at the Central Board of Trustees meeting in December or January. This will lead to an increase in the EPF corpus and strengthen employees' retirement security.
What rule might change
Currently, as per EPFO rules, employees whose basic salary is less than or equal to ₹15,000 per month are mandatorily covered under the PF and pension schemes. Employees earning more than this amount have the option to opt out of these schemes. The government is now considering increasing this limit to bring more employees under the ambit of social security.
According to sources, this proposal will be presented at the Central Board of Trustees meeting of the EPFO, scheduled for December 2025 or January 2026. A final decision on it may be taken during this meeting. If approved, PF deductions will commence from the salaries of millions of employees.
Over one crore employees to benefit
According to the internal assessment of the Labour Ministry, increasing the wage ceiling from ₹15,000 to ₹25,000 will mandatorily bring over one crore employees under the purview of EPFO schemes. Currently, in many cities across the country, low and medium-skilled employees are also earning more than ₹15,000. In such cases, they have so far been deprived of PF and pension benefits.
Labour organizations have also long demanded an increase in the existing wage ceiling to ensure more employees benefit from social security. This move by the government could prove to be a significant change in this direction.
What is the current system
Currently, both the employee and the employer must contribute 12% each of the employee's salary. The employee's entire 12% goes into their EPF account, while the employer's 12% is divided into two parts: 8.33% to the EPS (pension fund) and 3.67% to the EPF.
The total corpus of EPFO is currently approximately ₹26 lakh crore, with about 7.6 crore active members. If the new limit is implemented, this corpus could grow rapidly. This will provide employees with higher pension and interest benefits at the time of retirement.
What will be the impact
If the proposal is approved, employers will also have to make PF contributions for new employees. This means that for employees whose monthly salary is ₹25,000 or less, PF deduction will become mandatory. While this will provide employees with more funds at retirement, it will lead to a slight increase in employers' wage costs.
This move by the government will also expand EPFO's reach. Currently, the number of employees covered under EPFO is approximately 7.6 crore, but after the new rules are implemented, this number could increase by over one crore.
Impact on the economy
Experts say that this step will bring significant capital into the social security fund. This will provide EPFO with more resources for investment. An increase in pension funds and interest rates will benefit employees as well as the economy.
According to financial experts, this move will promote formal employment and a transparent wage system in the country. It will also incentivize private companies to implement more transparent social security schemes for their employees.
