EPFO News: Government raises EPFO ​​limit from ₹15,000; expect higher PF and pension savings

EPFO News: The Central Government has taken a major decision regarding the Employees' Provident Fund (EPF), under which the salary limit for EPF coverage could be raised from ₹15,000 to ₹25,000. Here is a look at what will change.

EPFO News: For quite some time, various employee organizations had been demanding an increase in the EPS salary ceiling. The Ministry of Finance has recently approved this move, bringing great joy to employees. This decision paves the way for employees to accumulate higher savings for their PF-linked pensions.

What is the Central Government's decision?

The Central Government is preparing to raise the salary limit for EPF and EPS coverage for employees. The Ministry of Finance has approved a proposal to increase the monthly salary ceiling for this retirement fund from ₹15,000 to ₹25,000. This proposal will now be sent to the Cabinet for approval, after which the effective date for the new limit will be determined.

Benefits for employees

With the implementation of this new limit, a large number of employees earning between ₹15,000 and ₹25,000 will gain access to future savings and pension benefits. This move could enhance social security for private-sector employees.

Increased cost burden on companies

This change introduced by the government will also impact companies. Bringing more employees under the EPF and EPS ambit will require companies to make higher contributions, potentially increasing their payroll costs. Under the EPF system, the employer contributes 8.33% of the basic salary to the pension fund, while the government contributes 1.16%. Consequently, an increase in the number of covered employees could also raise the government's expenditure. A budget of ₹11,144 crore has been allocated for EPS for the 2026-27 financial year.

What happens if the proposal is passed?

If this proposal is passed, employees earning a basic salary of between ₹15,000 and ₹25,000 will also mandatorily come under the ambit of the EPF and EPS schemes. Currently, participation in these schemes is mandatory only for employees with a basic salary of up to ₹15,000; those earning above this threshold could opt out, and employers were under no legal obligation to enroll them.

When will the rule come into effect?

It is worth noting that following Cabinet approval, companies may be granted time to modify their payroll systems and necessary processes. Consequently, the rule will not be implemented with immediate effect. Currently, it is anticipated that the new EPF wage ceiling could come into force on April 1, 2027. However, the final date will be determined only after Cabinet approval and the government's decision.