Manas Dasgupta
NEW DELHI, Sept 16: For the first time in 12 years, the Centre on Wednesday decided to raise wage ceiling from 15,000 to Rs 25,000 per month for mandatory coverage under the Employees’ Provident Fund Organisation (EPFO) benefitting millions of workers in the country.
The decision was taken by the union cabinet at a meeting on Wednesday held under the chairmanship of the Prime Minister Narendra Modi, and would come into force with immediate effect, Minister of Information and Broadcasting Ashwini Vaishnaw announced during a press briefing. “This has been a long-standing demand and the Prime Minister approved it in today’s cabinet meeting,” he said.
This means that employees earning up to Rs 25,000 will now be covered by the EPFO, which previously excluded them from mandatory EPFO coverage because their monthly salaries exceeded Rs 15,000. Currently, an employee earning more than Rs 15,000 a month is not automatically required to come under the EPF framework. With the government increasing the ceiling, employees earning between Rs 15,000 and Rs 25,000 a month will be brought within the mandatory social security framework, subject to the applicable rules.
The decision will also expand access to provident fund savings, pension protection under the Employees’ Pension Scheme (EPS) and insurance protection under the Employees’ Deposit Linked Insurance Scheme (EDLI), the statement further read
Mr Vaishnaw said the decision could bring more than 5.1 million additional employees under mandatory EPFO coverage. This decision would increase monthly contributions to employees’ provident fund and pension accounts, significantly strengthening their retirement funds. The government would bear an additional expenditure of Rs 11,339 crore to implement this scheme. The estimated expenditure over five years is approximately Rs 56,696 crore.
Vaishnaw said the EPFO salary limit had remained unchanged for a long time. It remained unchanged between 2004 and 2014 when it was raised to Rs 15,000 per month in September 2014. Now, nearly 12 years later, the government has decided to raise it to Rs 25,000. The government said it made this change in light of higher wages, income growth, and the expansion of formal employment over the past few years.
During the press briefing, Union Labour Minister Mansukh Mandaviya said ₹23,000 was the average salary in private establishments as per a government survey. “More workers will get benefits of pension, death insurance and better interest for their savings as the EPFO expands its coverage,” he said. Employers’ contribution would increase by ₹600 per employee, the Minister said, adding that the contribution of employees towards the EPS will also increase. “From Vishwakarma Jayanti (17 September) wage ceiling of Rs 25,000 will be implemented,” he said.
“The decision carries forward this approach by raising the ceiling to Rs 25,000 to reflect sustained wage growth, rising incomes, and continued expansion of formal employment over the intervening years,” an official release said.
According to the government, this change could also foster employment formalisation. When employees join systems like the EPFO, their savings, pensions, and insurance coverage are managed more systematically. For companies, expanded social security coverage can help retain employees over the long term and build a stable workforce.
The Centre said the EPFO operates one of the world’s largest social security systems. The latest data shows it has 7.98 crore members and 7.68 lakh businesses.