New Delhi, October 1 (TNA) A major change in the Employees’ Provident Fund Organisation (EPFO) rules has come into effect, widening mandatory social-security coverage for salaried workers. The wage ceiling for compulsory EPFO enrolment has been increased from ₹15,000 to ₹25,000 per month.
The revised limit is expected to bring more than 51 lakh additional employees under mandatory EPFO coverage. The change covers eligible employees earning between ₹15,000 and ₹25,000 a month who were earlier outside the compulsory framework unless their employers enrolled them voluntarily.
Three Major Benefits
Employees brought under the expanded coverage will become eligible for benefits under the three main EPFO-linked schemes, subject to the applicable provisions:
• Employees’ Provident Fund (EPF): Retirement savings through contributions from the employee and employer.
• Employees’ Pension Scheme (EPS): Pension benefits based on the applicable rules and contribution structure.
• Employees’ Deposit Linked Insurance Scheme (EDLI): Insurance protection for eligible members’ nominees in the event of death during service.
The government said the measure would extend formal social-security protection to a larger section of the organised workforce.
Employer Contribution Also Rises
With the pensionable wage ceiling increased to ₹25,000, the maximum employer contribution towards the pension component under EPS could rise from ₹1,250 to ₹2,083 per month, based on the applicable 8.33 per cent contribution rate.
Existing EPFO members whose wages are above ₹15,000 may also see an increase in the contribution-linked benefit structure, depending on their eligibility and the manner in which their employers implement the revised ceiling.
Impact on Take-Home Salary
For employees newly brought under mandatory EPFO coverage, the employee’s contribution—generally 12 per cent of the applicable basic wages and dearness allowance-will be deducted from salary. This could reduce monthly take-home pay, but the employee will receive a matching employer contribution towards retirement savings, along with pension and insurance-linked protection.
The revised wage ceiling is the first major increase since 2014. The Labour Ministry said the decision would strengthen long-term financial security and broaden access to retirement and insurance benefits for workers.