EPFO Wage Ceiling Likely To Be Hiked From Rs 15K To Rs 25K Per Month? Reports

The Employees’ Provident Fund Organisation (EPFO) is likely to increase its wage ceiling to Rs 25,000 per month in the coming months for the mandatory inclusion of employees in the Employees' Provident Fund and the Employees' Pension Scheme, news website Moneycontrol has reported.

Currently, EPF and EPS mandate coverage for employees earning up to Rs 15,000 per month in basic pay. Both the employer and employee contribute 12 percent of the employee’s salary to EPF and EPS every month. Employees who are earning more than Rs 15,000 per month may choose to opt out of these two EPFO schemes. It is not legally required of the employers to register such employees under EPF and EPS.

The Central Board of Trustees of the EPFO is likely to consider the matter in its next meeting which may take place in December or January. The new EPFO rule may receive final approval during the meeting, the report said.

"As per an internal assessment of the labour ministry, the Rs 10,000 per month increase in the wage ceiling would make social security benefits mandatory for over 10 million more individuals," an official told Moneycontrol.

The labour unions have long called for an increase in the pay cap as the monthly salaries of many low or mid-skilled workers in many metro cities are more than Rs 15,000 per month. If the ceiling were raised, these employees would become a part of EPFO, the official informed Moneycontrol.

According to officials, raising the wage threshold would also result in a significant increase in the EPF and EPS corpus, which would boost the pension payout for employees upon retirement.

According to experts, raising the EPF wage cap from Rs 15,000 to Rs 25,000 per month is a step in the right direction toward increasing social security coverage and bringing the threshold into line with current income levels.