New Delhi: The Employees’ Provident Fund Organisation (EPFO) is considering increasing the mandatory wage ceiling for contributions to the Employees’ Provident Fund (EPF) and Employees’ Pension Scheme (EPS) from Rs 15,000 to Rs 25,000 per month.

According to a report by Moneycontrol, currently, employees earning more than Rs 15,000 in basic pay can opt out of these schemes, leaving many mid-income workers without guaranteed social security coverage. The proposed increase could make over 10 million additional employees eligible for retirement and pension benefits.

Why the change matters

Labour unions have long argued that salaries of many low- and mid-skilled workers in metro cities exceed Rs 15,000, yet they remain outside mandatory social security schemes. Raising the ceiling would ensure a broader inclusion of India’s workforce in EPFO programs.

The proposal is expected to be discussed by the EPFO Central Board of Trustees (CBT) in its next meeting, scheduled for December or January, with a final decision likely soon after.

How the contribution works

Currently, both employers and employees contribute 12% of the employee’s salary toward social security. Of the employer’s contribution, 3.67% goes to EPF and 8.33% to EPS, while the employee’s entire 12% goes to their EPF account.

If the ceiling is raised, the EPF and EPS corpus, currently around Rs 26 lakh crore, could grow further, increasing pension payouts for retirees and boosting long-term savings.

Benefits for employees

Higher retirement savings: Employees will accumulate a larger EPF corpus over their working life.

Stronger pension coverage: The EPS contribution increase will enhance monthly pension benefits after retirement.

Payroll transparency: Mandatory inclusion reduces avoidance and ensures consistent contributions.

Challenges and considerations

Some employees, particularly in lower and middle-income brackets, may prefer higher in-hand salaries over mandatory contributions, according to experts. Employers may also face increased compliance and administrative responsibilities.