In a major reform for members, the Employees’ Provident Fund Organisation (EPFO) is mulling increasing the wage ceiling for mandatory contribution towards the provident fund and its pension scheme, according to a report. Currently, the wage ceiling for inclusion under EPFO is Rs 15,000 per month.
The last time the EPF ceiling was revised was in 2014, when it was increased from Rs 6,500 to Rs 15,000 per month. This change became effective on September 1, 2014.
This assumes significance as the ceiling decides who must be mandatorily enrolled in the Employees Provident Fund (EPF) and Employee’s Pension Scheme (EPS). Overall, the move can be seen as part of efforts to strengthen retirement security and expand social protection for millions of workers.
Why the Rs 15,000 cap is being reconsidered
Speaking at an event in Mumbai, Department of Financial Services (DFS) Secretary M Nagaraju recently said the current structure leaves a large number of employees earning above Rs 15,000 per month without any pension cover. He called it “very bad” that many private-sector workers earning slightly more than the limit are still not part of any formal pension scheme and later end up depending on their children in old age.
EPF enrolment is mandatory only for employees earning up to ₹15,000 per month in basic salary. Anyone earning above this can opt out, and employers are not legally bound to register them. This creates a gap in pension coverage, especially in urban areas where even entry-level salaries often cross the threshold.
EPFO may raise wage ceiling to Rs 25,000
According to various reports, the EPFO may increase the ceiling to Rs 25,000 per month, and the proposal may be taken up in the next meeting of its Central Board of Trustees (CBT), expected early next year.
An internal assessment by the labour ministry estimates that raising the limit by Rs 10,000 could bring more than 1 crore additional workers under mandatory EPF and EPS coverage. Labour unions have been demanding this hike for years, arguing that the Rs 15,000 limit no longer reflects current wage levels in metros and large cities.
Why the government is pushing this change
The move is in line with the broader effort to strengthen India’s social security net:
Enrollment under Atal Pension Yojana has already crossed 8.3 crore subscribers, with women making up nearly half.
India still has a long way to go — more than two-thirds of Indians do not have life insurance, and many young earners may not have enough savings for retirement 30 years from now.
A higher EPF ceiling will automatically push more workers into long-term retirement saving.
How EPF contributions work today
For employees covered under EPF:
12% of employee’s salary goes to EPF
Employer contributes 12%, split into:
8.33% to pension scheme (EPS)
3.67% to EPF
With a higher wage ceiling, both EPF and EPS contributions would rise, leading to larger retirement savings and higher pension payouts.
What the proposed change means for you
If the ceiling is raised to Rs 25,000, here’s how it affects different categories of workers:
- If you earn more than Rs 15,000 but less than Rs 25,000
You will now automatically be covered under EPF and EPS.
This means:
-Compulsory monthly savings
-Lifelong pension benefits after 10 years of service
-Higher interest accumulation in EPF
- If you already earn more than ₹25,000
There is no direct impact, as enrollment beyond the ceiling continues to remain voluntary.
However, your employer may choose to extend EPF benefits to more employees than before.
- If you are already an EPF member
Your contributions may rise if your EPF is currently restricted to the ₹15,000 base salary.
A higher limit will directly increase:
Your EPF corpus
Your EPS (pension) benefits
Your employer’s contribution
Your tax-free long-term retirement savings
- If you are an employer
Your cost per employee will rise, as EPF contributions will be calculated on a higher base. However, this strengthens employee welfare and reduces long-term financial vulnerability among workers.
Why this matters now
India’s pension coverage is still low compared to global standards. With rising life expectancy, higher living costs and low personal savings, workers need structured, long-term retirement planning. Increasing the wage ceiling is one of the simplest ways to bring millions more into the safety net.
EPFO today manages a massive corpus of Rs 26 lakh crore with 7.6 crore active members. A higher ceiling will increase contributions and strengthen the pension ecosystem.
Summing up…
The likely hike in EPF’s wage ceiling from Rs 15,000 to Rs 25,000 is a significant, long-overdue reform. It will ensure more workers enter the formal pension system, accumulate higher retirement savings, and enjoy better financial security in their old age. Once approved by the EPFO trustees, the change will impact millions — especially low- and mid-income employees in urban India.