EPFO Wage Ceiling Raised To Rs. 25,000: 51Lac More Employees To Get Social Security Benefits

The Union Cabinet today approved a major expansion of mandatory Employees' Provident Fund Organisation (EPFO) coverage by raising the wage ceiling from Rs. 15,000 per month to Rs. 25,000 per month.

Union Minister Ashwini Vaishnaw announced the decision following the Cabinet meeting. The decision was approved today by the Cabinet chaired by Prime Minister Narendra Modi, and is expected to bring more than 51 lakh additional employees under mandatory EPFO coverage.

The proposal was moved by the Ministry of Labour and Employment and marks the first revision to the mandatory EPFO wage ceiling since September 2014.

EPFO Wage Ceiling Increase, Impact on Employees

Under the existing framework, employees joining an institution with wages up to Rs. 15,000 per month are mandatorily covered by EPFO. The government has now approved raising this threshold to Rs. 25,000.

This means employees earning between Rs. 15,000 and Rs. 25,000 a month who would previously have fallen outside mandatory coverage can now come under the statutory social security framework, subject to the applicable EPFO scheme provisions.

EPFO-linked benefits include Employees' Provident Fund (EPF) savings, Employees' Pension Scheme (EPS) benefits and Employees' Deposit Linked Insurance (EDLI) coverage, depending on eligibility and the relevant scheme rules.

The Labour Ministry has previously noted that the Rs. 15,000 wage ceiling had been in place since September 2014.

Over 51 Lakh Additional Employees To Benefit

According to the government's announcement, more than 51 lakh additional employees are expected to come under mandatory EPFO coverage after the increase in the wage ceiling.

EPFO Wage Ceiling Was Last Revised In 2014

As per the Labour Ministry the EPFO mandatory wage ceiling has been unchanged at Rs. 15,000 since September 2014.
Before that, the ceiling had remained unchanged for several years. The government had raised it from Rs. 6,500 to Rs. 15,000 with effect from September 1, 2014.

Government Expenditure On EPFO Coverage will also increase. The government's estimated annual expenditure under the revised arrangement is around Rs. 11,339 crore, compared with the existing budgetary support of about Rs. 10,250 crore. Over a five-year period, the total expenditure is estimated at approximately Rs. 56,696 crore.