The Employees’ Provident Fund Organisation (EPFO) is set to make major changes to its rules that will, in turn, increase social-security coverage for the salaried class. Reports say that the government is planning to elevate the monthly salary limit from ₹15,000 to ₹25,000 for the mandatory inclusion under the umbrella of PF and pension (EPS) benefits. If the decision is affirmed, it could lead to 10 million more employees getting their status upgraded to EPF/EPS.
What Are the Current Rules?
The current situation is such that only those employees whose basic salaries do not exceed ₹15,000 per month are automatically and mandatorily covered to the extent of the EPF and EPS schemes. Employees with salaries above this limit may or may not be enrolled and are allowed to voluntarily exit the scheme. This situation leads to a scenario where a large number of workers earning just marginally more than ₹15,000 are kept out of compulsory PF and pension benefits — even though they are working in the formal sector.
What Will Change Under the Proposed Rule?
As per the proposal, all employees whose basic pay is up to ₹25,000 will be comprehensively covered by the EPF and EPS schemes. This will imply that both the employee and the employer will deposit 12% of that pay into the PF account, where the employer’s portion will be divided between the PF and pension fund (EPS) components. The labour ministry expects the very alteration to be introduced to the Central Board of Trustees (CBT) during its EPFO meeting planned for around December or January.
Who Stands to Benefit and What Are the Impacts?
Employees in the salary range of ₹15,001 to ₹25,000 per month are the primary beneficiaries of this new policy — their group receives a portion of compulsory retirement money and pension coverage for the first time through mandated regulations. In turn, employers face the burden of increased regulation and greater contribution liabilities. Employees will not notice any sharp decline in their monthly net salary due to PF deductions, but the deferred advantages (accumulation of corpus + pension) will be of a larger extent.
What You Should Do Now
If you are in this salary group or your salary is likely to be in that range:
- Inquire if your employer is already enrolled in EPF and if contributions toward PF are being made.
- Stay updated with the notifications from EPFO or the ministry of labour — until the final rule is announced, the revised limit only exists as a proposal.
- Get ready for potential deductions from your salary as soon as the rule comes into effect — adjust your financial planning accordingly.
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