EPFO: If you’re employed and your basic salary is Rs 25,000 or less, this news is useful. According to sources reported to Moneycontrol, the government plans to raise the EPFO salary limit from Rs 15,000 to Rs 25,000 per month, meaning even those with higher salaries will now be covered by the PF and Pension Scheme (EPS).
This will provide social security benefits to over 10 million employees. The EPFO’s Central Board of Trustees is expected to take a decision on this at its meeting in December or January. What are the rules so far? Currently, only those with a basic salary of Rs 15,000 or less are eligible for the benefits of EPF (Employees’ Provident Fund) and EPS. If your salary is higher than this, you can opt out of contributing to PF if you wish. Companies are also not required to register such employees in EPF.This means that many people were excluded from the PF scheme even with a basic salary of Rs 15,001.
What will change?
If the new proposal is passed, it will be mandatory for those with a salary of Rs 25,000 or less to join EPF and EPS. This means that PF will be deducted from your salary. Your employer will also contribute the same amount to PF, and you will receive better pension and interest benefits after retirement. According to the Labor Ministry, this move will bring 1 crore new employees under the ambit of EPFO.
How much PF will be deducted and where will it go?
Currently, both the employee and the company have to contribute 12% each to EPF. The entire 12% contribution of the employee goes into your PF account. The company’s 12% is divided into two parts: 3.67% in PF and 8.33% in EPS. This will increase your savings, earn interest, and strengthen your pension upon retirement. Who will benefit – Employees earning more than Rs 15,000 and up to Rs 25,000 will now also get the mandatory PF benefit. Those whose salary was previously excluded from PF due to the limit will now come under social security coverage.
In the long run, this will strengthen your retirement planning. Some people may fear that their in-hand salary will decrease slightly because of the increase in PF contribution. Overall , if this proposal of the government is passed, it will be a big step towards a secure future for working people. Now PF will be deducted from your salary, but your pension, interest and savings will also increase.