Big boost for workers: Wage ceiling for Provident Fund coverage may rise to Rs 25,000 under EPFO reform plan
Currently, employees earning up to Rs 15,000 per month in basic pay are mandatorily covered under EPF and EPS, while those earning above this limit can opt out.
- Oct 28, 2025,
- Updated Oct 28, 2025 9:36 PM IST
The Employees’ Provident Fund Organisation (EPFO) is likely to increase the wage ceiling for mandatory inclusion under the Employees' Provident Fund (EPF) and Employees' Pension Scheme (EPS) from the current Rs 15,000 per month to Rs 25,000, according to government officials aware of the development. The move, which could bring millions of additional workers under the social security net, is expected to be taken up by the EPFO’s Central Board of Trustees in its next meeting, likely in December or January.
Currently, employees earning up to Rs 15,000 per month in basic pay are mandatorily covered under EPF and EPS, while those earning above this limit can opt out. Employers are not legally required to register employees exceeding the wage threshold under these schemes. The proposed hike in the wage ceiling — the first such revision since 2014 — aims to align the eligibility threshold with prevailing salary levels, particularly in urban areas where wages have significantly risen.
An official familiar with the labour ministry’s assessment told Moneycontrol that raising the wage ceiling by Rs 10,000 could make EPF and EPS contributions mandatory for over 10 million additional workers. “The demand for increasing the wage limit has been consistent, especially from labour unions, as the current ceiling no longer reflects the real wage conditions in metros and large industrial centres,” the official added.
Under existing rules, both employer and employee contribute 12 percent of the employee’s salary to EPF and EPS each month. While the employee’s entire 12 percent goes into the EPF account, the employer’s share is divided — 3.67 percent toward EPF and 8.33 percent toward the EPS. The higher wage ceiling would not only enhance employees’ social security coverage but also lead to a larger corpus in both EPF and EPS, strengthening long-term pension and interest earnings.
EPFO currently manages a total corpus of around Rs 26 lakh crore, with nearly 7.6 crore active members. Experts believe the proposed revision represents a progressive step toward expanding social protection for India’s workforce and ensuring financial stability amid growing economic uncertainty.
They point out that while it could increase statutory costs for employers and marginally raise compliance requirements, the change would likely reduce avoidance practices and promote greater payroll transparency.
However, the proposal may also see some pushback from employees in the lower- and middle-income brackets, who often prefer a higher take-home salary over increased deductions toward provident fund contributions—particularly amid elevated inflation and living costs.
The Employees’ Provident Fund Organisation (EPFO) is likely to increase the wage ceiling for mandatory inclusion under the Employees' Provident Fund (EPF) and Employees' Pension Scheme (EPS) from the current Rs 15,000 per month to Rs 25,000, according to government officials aware of the development. The move, which could bring millions of additional workers under the social security net, is expected to be taken up by the EPFO’s Central Board of Trustees in its next meeting, likely in December or January.
Currently, employees earning up to Rs 15,000 per month in basic pay are mandatorily covered under EPF and EPS, while those earning above this limit can opt out. Employers are not legally required to register employees exceeding the wage threshold under these schemes. The proposed hike in the wage ceiling — the first such revision since 2014 — aims to align the eligibility threshold with prevailing salary levels, particularly in urban areas where wages have significantly risen.
An official familiar with the labour ministry’s assessment told Moneycontrol that raising the wage ceiling by Rs 10,000 could make EPF and EPS contributions mandatory for over 10 million additional workers. “The demand for increasing the wage limit has been consistent, especially from labour unions, as the current ceiling no longer reflects the real wage conditions in metros and large industrial centres,” the official added.
Under existing rules, both employer and employee contribute 12 percent of the employee’s salary to EPF and EPS each month. While the employee’s entire 12 percent goes into the EPF account, the employer’s share is divided — 3.67 percent toward EPF and 8.33 percent toward the EPS. The higher wage ceiling would not only enhance employees’ social security coverage but also lead to a larger corpus in both EPF and EPS, strengthening long-term pension and interest earnings.
EPFO currently manages a total corpus of around Rs 26 lakh crore, with nearly 7.6 crore active members. Experts believe the proposed revision represents a progressive step toward expanding social protection for India’s workforce and ensuring financial stability amid growing economic uncertainty.
They point out that while it could increase statutory costs for employers and marginally raise compliance requirements, the change would likely reduce avoidance practices and promote greater payroll transparency.
However, the proposal may also see some pushback from employees in the lower- and middle-income brackets, who often prefer a higher take-home salary over increased deductions toward provident fund contributions—particularly amid elevated inflation and living costs.