1. Good news! EPF cover wage limit to be raised from Rs 15,000 to Rs 21,000

Good news! EPF cover wage limit to be raised from Rs 15,000 to Rs 21,000

The government is set to raise the monthly wage ceiling for mandatory Employees’ Provident Fund (EPF) cover to `21,000 from `15,000 at present, a move that could inflate the government’s annual Employees Pension Scheme (EPS) outflow by 50% to Rs 3,000 crore.

By: | Updated: December 2, 2017 7:25 AM
 wage limit, epf, Employees Pension Scheme, EPS, EPFO,  Once implemented, the change could also raise the number of active EPF subscribers by around 50 lakh to 4.25 crore The labour ministry’s proposal to raise the ceiling has been pending for quite sometime now.

The government is set to raise the monthly wage ceiling for mandatory Employees’ Provident Fund (EPF) cover to Rs 21,000 from Rs 15,000 at present, a move that could inflate the government’s annual Employees Pension Scheme (EPS) outflow by 50% to Rs 3,000 crore. Once implemented, the change could also raise the number of active EPF subscribers by around 50 lakh to 4.25 crore The labour ministry’s proposal to raise the ceiling has been pending for quite sometime now. The finance ministry, which had asked the labour ministry to assess the financial implication of the proposal, has received the inputs recently and given the go-ahead.

The government pays 1.16% of the wages to each subscriber earning less than Rs 15,000 a month towards EPS.  Under the current rules, it is mandatory for units employing 20 or more people to provide EPF benefits to workers. While employees contribute 12% of the basic pay to EPF, the employer contributes 8.33% of the pay (up to Rs 15,000) towards EPS and 3.67% of the pay to EPF. Employers also pay 0.5% towards employee deposit linked scheme (EDLI), 0.65% as EPF administrative charges and 0.01% as EDLI handling fee.  Though the threshold exists for mandatory cover, employers and workers can opt for the scheme even if the salary levels are higher.

The government provides a grant to the tune of Rs 3,000 crore per annum towards payment of minimum pensions of Rs 1,000 per month.  The Central Board of Trustees, the highest decision-making body of the Employees’ Provident Fund Organisation (EPFO), gave approved the proposal to raise the wage cap for mandatory EPF cover to Rs 25,000 per month for organised-sector workers long ago.

Following this, the labour ministry sent the proposal to the finance ministry for its approval which would require to be notified by the government subsequently.  Since inception, EPFO has raised the wage threshold for nine times with the last revision in November 2014 from Rs 6,500 a month. The wage threshold for medical/cash and insurance benefits under the Employees’ State Insurance Corporation (ESIC) was also raised last year to Rs 21,000 per month, from 15,000 previously.

ESIC, another social security venture of the government, had in September last year raised the threshold to `21,000 per insured persons in sync with the hike in minimum wages. In ESIC, the employer contributes 4.75% of the wages and the employee 1.75% The labour ministry has proposed that provident fund, pension and insurance benefits currently being accorded to a section of organised-sector workers be extended to the entire working population under a comprehensive social security net. India has an around 49 crore working population.

  1. Srinivasan Sundaresan
    Dec 4, 2017 at 7:51 pm
    This is no good news … Don’t believe this organisation EPFO!!! Rules and regulations framed by EPFO for Compulsory contributory Provident Fund Scheme/ Pension Scheme are totally useless and a retiree can never get a decent pension under these rules. Pension scheme needs immediate changes …contributer should get 50 amount of his last drawn ry as pension at the time of his retirement and for revisions should come under the ambit of govt pay commission. All the funds required for the administration of this EPFO is derived from the EPFO contributors fund unlike Central Govt Provident Fund which functions on tax payer’s money. Why this disparity? EPFO sucks enormous surplus funds amounting to several thousands of crores, from the EPFO contributing member’s fund. In 2015-16, the EPFO had collected ₹3,758 crore from administrative charges Earlier as on 31 March 2012, the accumulated surplus of EPFO, on administration account was Rs.8558.08 crore.
    Reply
    1. Basavaraj Basu
      Dec 4, 2017 at 12:09 am
      I am getting pension Rs 2242 after revision how much I will get
      Reply
      1. S
        Suhas P Jadhav
        Dec 3, 2017 at 11:31 am
        RPFC has removed 0.01 as EDLI handling fee i.e. account no. 22 on existing limit of PF ry if RS. 15000. Please update
        Reply
        1. B
          B C KULKARNI
          Dec 2, 2017 at 7:52 pm
          Will there be an increase in the Pension?
          Reply
          1. J
            Jayakumaran
            Dec 2, 2017 at 7:35 am
            This 'good' news totally ignores the recent ruling by Supreme Court that the there should not be any cap on the monthly wages for the purpose of EPF-EPS benefit.
            Reply
            1. N
              N S Margaj
              Dec 3, 2017 at 3:48 pm
              Since 49 crore are working population as mentioned in the above note and as regards to social security it needs to amend the definition of "basic wages" under the EPF Act and SCHEME 1952. ALSO to remove sec.2(f)(ii)"excluded employee". So that each and every employee will be covered. Like wise quantum of benefit should be raise under the EPS Scheme 1995 according to cost of living.
              Reply
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