EPFO Update: The Employees’ Provident Fund Organization (EPFO) is preparing to make significant changes to its rules. Currently, the salary threshold for mandatory membership in EPF and EPS is ₹15,000 per month, which is being considered for an increase to ₹25,000. If this proposal is implemented, more than 10 million employees across the country will be able to benefit from social security schemes like pension and provident fund for the first time. The current threshold was last raised from ₹6,500 to ₹15,000 in 2014.
What are the current rules and their limits?
Under current rules, companies must enroll employees earning a basic salary of up to ₹15,000 in EPF and EPS. Joining is optional for those earning salaries above this limit. This is why a large number of employees in the private sector are unable to access pension and retirement savings. They automatically fall out of this security net after a small salary increase, increasing their future financial insecurity.
Why the Need to Raise the Salary Limit?
According to reports, Department of Financial Services Secretary M. Nagaraju said at an event in Mumbai that the lack of pension coverage for employees earning just over ₹15,000 is a matter of concern. The old rules are no longer sufficient to accommodate rising inflation, changing expenses, and current living standards. He stated that it is necessary to immediately revise the income limit to broaden pension protection.
Potential Impact of the Limit Increase
If the salary limit is raised to ₹25,000, the Central Board of Trustees may take a final decision on this proposal early next year. According to the Labor Ministry’s estimates, an increase of ₹10,000 would result in more than 10 million employees joining the EPF and EPS. This has been a long-standing demand of employee organizations, as the old limit does not meet current economic conditions.
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According to experts, once the new rule is implemented, employees’ monthly savings will automatically increase, their EPF balance will grow rapidly, and future pensions will also be higher. Currently, employees contribute 12 percent of their basic salary to the EPF, and employers contribute an equal amount. As the salary limit increases, both contributions will increase, and the benefits will directly accrue to the employee.
EPFO’s Current Scope
The EPFO currently manages a fund of approximately ₹26 lakh crore and has 76 million active members. Raising the salary limit will bring a larger number of employees under pension protection. This is considered the biggest social security reform in the last decade. While it will increase employer costs slightly, it is seen as a step that will strengthen employee welfare and financial stability in the long run.
