EPFO: Big update for EPFO members. According to reports, the EPFO’s Central Board is expected to discuss this proposal at its next meeting, likely in December or January. If the proposal is approved, it will be the first time since 2014 that the pay ceiling will be revised. Currently, employees earning Rs 15,000 per month or less are required to join EPF and EPS.
Employees earning more than Rs 15,000 have the option to opt out of these schemes. Employers are not legally obligated to enroll such employees in EPF or EPS. Additionally, labor unions have long demanded an increase in the wage threshold. They argue that in metropolitan areas, low- and medium-skilled workers currently earn more than 15,000 rupees, making them ineligible for the EPFO. However, the new threshold will address this issue.
According to the rules, every month both the employer and the employee contribute 12 percent of the salary. The entire 12 percent of the employees goes into the EPF account, while the employer’s 12 percent is divided into two parts. Of this, 3.67 percent goes to EPF and 8.33 percent to EPS. If the limit is raised to 25,000, the contribution to the PF account by both employers and employees will increase from 1,800 to 3,000 rupees per month. This means a total of 2,400 more will be deposited.
At the same time, due to increase in the salary limit, there will be a huge increase in the fund amount of both EPF and EPS. This will increase the pension received at the time of retirement and the interest rate amount will also increase. At present, EPFO has about 7.6 crore active members and its total fund is around Rs 26 lakh crore.
