Indians earning up to ₹25,000/month can now get PF benefits
What's the story
The Union Cabinet has approved a significant hike in the wage ceiling for Employees' Provident Fund Organisation (EPFO) subscribers. The new limit has been raised from ₹15,000 to ₹25,000 per month. This means that employees coming under this retirement fund body will now have to contribute toward social security up to this new wage limit. Beyond that, contributions would be voluntary.
Coverage expansion
Over 51L new employees will come under EPFO coverage
The hike in wage ceiling is expected to bring more workers under the EPFO umbrella.
The government estimates that over 51 lakh new employees will come under mandatory EPFO coverage due to this move.
Union Information & Broadcasting Minister Ashwini Vaishnaw said the annual government outgo is estimated at around ₹11,339 crore, against an existing annual budgetary support of roughly ₹10,250 crore.
The estimated expenditure over five years is around ₹56,696 crore.
Benefit expansion
Last hike in wage ceiling was done in September 2014
The government's decision will widen access to provident fund savings, pension protection under the Employees' Pension Scheme (EPS), and insurance coverage under the Employees' Deposit Linked Insurance Scheme (EDLI).
The move is also expected to make the statutory contribution and pensionable-wage structure more in line with current wage levels.
The last increase in EPFO wage ceiling was done in September 2014 when it was raised from ₹6,500 to ₹15,000.
Wage reflection
New wage ceiling takes into account sustained wage growth
The new EPFO wage ceiling of ₹25,000 takes into account sustained wage growth, rising incomes, and the continued expansion of formal employment over the years. This will bring employees earning between ₹15,000 and ₹25,000 per month under a statutory social security framework.