The Union Cabinet is likely to consider a proposal on Wednesday to raise the wage ceiling for mandatory coverage under the Employees’ Provident Fund (EPF) and Employees’ Pension Scheme (EPS) to ₹25,000 from the existing ₹15,000, according to people familiar with the matter.
The proposed increase would raise the salary threshold used to determine which employees must be covered under the EPF and EPS frameworks.
Existing ₹15,000 Ceiling Unchanged Since 2014
The current wage ceiling of ₹15,000 per month has remained unchanged since September 1, 2014.
This threshold determines the salary level up to which employees are mandatorily covered under the EPF and EPS schemes. The proposed revision to ₹25,000 would expand the scope of mandatory coverage to a larger group of employees.
The proposal, if approved, would represent the first major revision to the wage ceiling in more than a decade.
Higher Coverage May Not Mean Higher Employer Contribution
Raising the wage ceiling for mandatory coverage would not necessarily result in a higher mandatory contribution from employers.
According to the information available, companies may continue calculating their statutory contributions using the existing ₹15,000 wage ceiling. In that case, employees earning salaries of up to ₹25,000 could come under mandatory EPF and EPS coverage, while the employer’s mandatory contribution could continue to be calculated on the existing limit.
This would mean that the coverage threshold and the contribution calculation ceiling could remain different.
What the Proposal Could Mean for Employees
If approved, the proposal could bring more employees within the formal social-security framework by expanding mandatory access to:
- Employees’ Provident Fund savings
- Employees’ Pension Scheme coverage
- Retirement-related social-security benefits
- Employer-linked provident fund contributions, subject to applicable rules
However, the final impact on employees and employers would depend on the Cabinet’s decision and the detailed rules issued after approval.
Note: The proposal and possible changes are based on information supplied from people familiar with the matter. The final decision, implementation date and contribution-related provisions will depend on the government’s official announcement.
