EPFO wage limit has been increased from ₹15,000 to ₹25,000 per month after the Union Cabinet approved the change.
According to the government, the decision could bring more than 51 lakh additional employees under mandatory EPFO coverage.
The move will mainly benefit new employees earning more than ₹15,000 and up to ₹25,000 per month.
These workers can now come under the statutory social security system and get benefits linked to PF, pension and insurance.
EPFO Wage Limit Increased to ₹25,000
Under the existing system, employees joining with wages above ₹15,000 were not covered by mandatory EPF coverage in all circumstances.
With the new threshold, the coverage will be extended to more employees in the ₹15,000 to ₹25,000 salary range.
The government expects the change to bring over 5.1 million additional workers under mandatory EPFO coverage. It is also expected to increase participation in formal employment.
PF, Pension and Insurance Benefits
The change is not limited to Provident Fund savings. Employees covered under EPFO can receive social security benefits under applicable rules.
These include retirement savings through the Employees’ Provident Fund, pension benefits under the Employees’ Pension Scheme and insurance coverage under the Employees’ Deposit-Linked Insurance Scheme.
Government Spending on EPFO Coverage
The increase in the wage ceiling will also increase government expenditure. According to government estimates, the annual expenditure due to this decision will be around ₹11,339 crore.
At present, the government’s annual budgetary support is around ₹10,250 crore. The estimated expenditure over five years is around ₹56,696 crore.
How Many People Are Associated With EPFO
EPFO is among India’s largest social security systems. According to available data, it has around 79.8 million contributing members and approximately 768,000 contributing establishments.
The Employees’ Pension Scheme provides pension benefits to around 8.2 million pensioners.
