The central government is considering a hike in the salary limit for workers covered under the Employees’ Provident Fund (EPF) and Employees’ State Insurance Corporation (ESIC). The proposed increase would raise the monthly wage ceiling from the current limit to Rs 30,000, bringing more employees under these social security schemes. Additionally, there are plans to align the ESIC wage ceiling with that of the EPF.
Key Discussions at EPFO Meeting
This proposal was thoroughly examined during a meeting of the Central Board of Trustees (CBT), the decision-making body of the Employees’ Provident Fund Organisation (EPFO), on Saturday. Presently, the salary limit for EPFO coverage is Rs 15,000 per month, while for ESIC, it stands at Rs 21,000. Reliable sources suggest that both thresholds could soon be revised to Rs 30,000.
Final Decision Expected in February
The CBT is expected to make a final decision on the matter during its February meeting. Reports indicate that most members of the board, along with the Ministry of Labour, are in favor of this revision. If approved, the increased wage limit would make contributions to EPF and ESIC mandatory for a larger number of employees.
What the Revision Means for Employees
Currently, employees earning above Rs 15,000 per month can choose to opt out of EPF coverage. By raising the wage ceiling to Rs 30,000, the number of employees eligible for mandatory coverage would grow significantly. As of now, the EPFO has around 7 crore active members. The wage ceiling was last increased back in 2014, it was made Rs 6,500 to Rs 15,000 per month.
Impact on Provident Fund Contributions
Under the current rules, an employee earning a basic salary of Rs 15,000 contributes Rs 1,800 to their EPF account each month. If the salary limit rises to Rs 30,000, this contribution would double to Rs 3,600. Employers are required to match the employee’s contribution, significantly boosting retirement savings.
Boosting Financial Security
If implemented, this change will enhance employees’ long-term savings and strengthen the country’s social security framework. This move is expected to bring more stability and financial security to the workforce while benefiting both employees and employers.
