Centre likely to raise EPFO wage threshold

Nov 24, 2022

Synopsis
This will increase the mandatory contribution by both employees and employers, helping workers save more for their retirement. The increase will also bring more workers under the EPFO's social security coverage.

The government is likely to soon revise the wage ceiling for the Employees' Provident Fund Organisation's (EPFO) flagship retirement saving scheme.

This will increase the mandatory contribution by both employees and employers, helping workers save more for their retirement. The increase will also bring more workers under the EPFO's social security coverage.

Currently, the wage ceiling for the EPFO's Employees' Provident Fund (EPF) scheme is ₹15,000 per month, which was last revised in 2014 from ₹6,500 per month. The scheme is available only to enterprises that have more than 20 workers.

An expert committee will be set up shortly to determine a higher wage ceiling, which will be indexed to inflation and reviewed periodically for coverage under EPFO, a person aware of the development told ET.

According to the person quoted above, the EPFO wage ceiling could even be aligned with the higher ₹21,000 per month wage ceiling under the Employees' State Insurance Corporation.

This will bring parity between the two social security schemes of the government run by the labour ministry and ease the compliance burden on establishments.

The ceiling serves two purposes. One, organised sector workers earning less than ₹15,000 a month have to compulsorily become members of the EPF.

[The Economic Times]