EPFO Salary Limit Hike: The central government has boosted the wage ceiling for the Employees’ Provident Fund Organization (EPFO) from Rs 15,000 to Rs 25,000 per month. Over 50,000 employees across the Lucknow division stand to gain from higher provident fund contributions, which will lead to better retirement savings, improved pensions, and enhanced employee insurance protection.
Previously, many employers deliberately kept employee salaries just above Rs 15,000 to sidestep PF deductions. This practice will now come to an end. Before September 17th, the wage ceiling was set at Rs 15,000. In many organizations, even if an officer or employee earned Rs 30,000 monthly, their PF deduction was capped at Rs 1,800 based on the Rs 15,000 limit. Going forward, a mandatory Rs 3,000 PF deduction will apply to the Rs 25,000 salary.
The higher contribution amounts will also boost pension and insurance benefits at retirement. Most organizations regularly contribute 12 percent of an employee’s salary toward PF. While their contribution rates stay the same, the pension base will increase from Rs 15,000 to Rs 25,000.
Regional Provident Fund Commissioner Ashwini Kumar Gupta shared with reporters, “Many organizations intentionally raised employee salaries to Rs 15,000 to avoid PF deductions. These organizations will now be required to make contributions. Previously, PF deductions covered 535,000 employees across the Lucknow division’s Rae Bareli, Lucknow, Sitapur, Hardoi, and Barabanki districts. With this change, we could see an additional 50,000 contributors.”
Employees enrolling for the first time under the Prime Minister’s Vikasit Bharat Rojgar Yojana will also benefit. Provident Fund Commissioner Ashish Kumar noted that schools, colleges, hospitals, and construction firms are being targeted and encouraged to implement PF deductions to strengthen social security coverage.
This wage ceiling increase marks a significant milestone in the program’s history.
Before 2000 – Rs 5,000
2001 to 2014 – Rs 6,500
From 2014 – Rs 15,000
From September 17 – 25000
This is how pension will be determined:
The pensionable service (from this year to such and such year) will have to be added along with the pensionable salary i.e. according to the salary limit slab and divided by 70. For example, if someone worked for 10 years in the 6500 salary limit slab and 10 years in the 15000 salary limit slab, then the amount obtained by adding the service years of both and the amount of monthly salary limit in those years and dividing it by 70 will be the amount received as pension.
The EPFO’s insurance deduction will increase from 75 to 125 rupees. The insurance deduction was 75 rupees at the rate of half a percent, but now, due to the increase in the salary limit, it will be 125 rupees. In case of an accident, a payment of 7 lakh rupees is given, and there is also a provision to pay 2.5 lakh rupees in case of an accident after one year of service.