Millions of employees in the country are associated with the Employees’ Provident Fund Organization (EPFO) and build a strong retirement fund through small monthly deductions. This fund is considered crucial for employees’ long-term financial security. The government has periodically amended EPFO rules to ensure millions of employees remain protected in response to changing economic conditions. In this regard, the government is now seriously considering changing the current salary limit for mandatory EPFO membership.
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Why the Need to Change the EPFO Salary Limit
Currently, the mandatory salary limit for joining the EPFO is ₹15,000 per month. This limit was set several years ago, but over time, the salary structure and cost of living have rapidly increased. Consequently, this ₹15,000 limit is no longer considered practical. The government believes that the old limit limits employee protection, as many employees with slightly higher basic salaries are excluded from EPF and EPS coverage.
How much could the new limit increase?
According to government plans, the EPFO is considering increasing the salary limit from Rs. 15,000 to Rs. 25,000 per month. If this change is implemented, more than 10 million employees will be able to benefit from both EPF and EPS for the first time. This will bring them directly under the ambit of retirement funds and pension security, which will have a clear impact on their long-term financial stability.
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Benefits to Employees
Every employee enrolled in the EPFO contributes 12 percent of their basic salary to the EPF, and the employer contributes in the same proportion. The increase in the salary limit means that the contribution amount will also increase, allowing the EPF balance to grow faster than before. This will provide significant financial support to employees at the time of retirement.
Additionally, expanding the scope of the EPS (Employment Provident Fund) pension scheme will reduce financial pressure as we age. While this could impact companies through increased costs, it is being seen as a major reform for the well-being of employees. Currently, the EPFO has 76 million active members, and the new changes will directly benefit a large portion of this population.
