Centre raises EPF-EPS wage ceiling to Rs 25,000, millions of workers to benefit
Union Cabinet has raised the mandatory wage limit under EPF and EPS from Rs 15,000 to Rs 25,000 a month.
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The central government has taken a major decision for employees working in the private sector. At a Union Cabinet meeting held on Wednesday, September 16, the mandatory wage ceiling under both the Employees' Provident Fund (EPF) and the Employees' Pension Scheme (EPS) was raised from Rs 15,000 to Rs 25,000 per month. The decision is being seen as far-reaching for the future financial security of crores of employees.
The biggest beneficiaries of this decision will be employees whose basic wage is between Rs 15,000 and Rs 25,000. Until now, these employees were outside the mandatory PF scheme. There are more than 51 lakh such employees across the country who will now come under the scheme and start getting its legal benefits. This is expected to speed up the formalisation of employment in the unorganised sector.
This is the first change in the wage ceiling in 12 years. Previously, on 1 September 2024, the mandatory PF wage limit was raised from Rs 6,500 to Rs 15,000. Since then, employees' wages, inflation and the cost of living have risen substantially. The central government has taken this decision to keep pace with rising salaries and to ensure financial security after retirement.
With the higher wage ceiling, employees will get the benefit of three social security schemes at once. The first is the Employees' Provident Fund (EPF), which builds a large compounded retirement corpus. The second is the Employees' Pension Scheme (EPS), which guarantees a fixed monthly pension for life after retirement. The third is the Employees' Deposit Linked Insurance (EDLI), which provides life insurance cover to an employee's family in the event of an unfortunate incident.
Even though the wage ceiling has been raised to Rs 25,000, care has been taken to ensure companies do not face a sudden heavy financial burden. Companies will have the option of continuing to use the existing Rs 15,000 limit while calculating their mandatory contribution. This will widen the scope of PF coverage without disrupting the financial calculations of industry.
Following Cabinet approval, the Ministry of Labour and Employment and the EPFO will soon issue the legal amendments and administrative circular needed to implement the decision. After that, the new wage ceiling will come into effect at all registered establishments across the country.
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