Wage Ceiling Limit Under EPFO: The government is considering increasing the wage ceiling limit for people covered under the Employees’ Provident Fund Organization (EPFO). This means the minimum salary of PF account holders could rise from Rs 15,000 to Rs 21,000.
This change will lead to an increase in the contribution of salaried employees to the PF, and at the same time, employees will benefit from a higher pension after retirement. This is because both the employer and employee contributions will increase. The government’s goal is to enhance social security coverage for employees.
Pension will increase after retirement!
Usually, 12% of an employee’s basic salary is deposited in the EPF, with the employer contributing the same percentage of the basic salary. Out of this 12%, 8.33% is deposited into the EPS account. Currently, on the wage ceiling limit of Rs 15,000, 8.33% of it is deposited into the employee’s pension account, i.e., EPS.
If the wage ceiling limit is increased to Rs 21,000, 8.33% of this amount will now be deposited into the EPS account. This will lead to an increase in the pension after retirement. Previously, 8.33% of Rs 15,000 (i.e., Rs 1,250) was deposited into EPS. With the wage ceiling limit increasing to Rs 21,000, 8.33% of this amount (i.e., Rs 1,749) will now be deposited into the pension account.
EPFO Gives Final Opportunity till 31st January2025 to Employers to upload wage details etc.regarding over 3.1 Lakh pending applications for Pension on Higher Wages #EPFO #POHW pic.twitter.com/ZcPyUC0nmp
— Employees Provident Fund Organisation, RO Udaipur (@epfoudaipur) December 19, 2024
https://platform.twitter.com/widgets.js
Pension Amount to Increase Along with EPF Lump Sum
Along with receiving a lump sum payment from the EPF after retirement, the Employees’ Pension Scheme (EPS) will also see an increase. The wage ceiling limit for EPS, which was last amended in 2014, may now be revised to benefit employees further.
Historical Wage Ceiling Amendment and Its Impact
In 2014, the government increased the wage ceiling limit from Rs 6,500 to Rs 15,000, which allowed for better contributions to the pension account. Given the rising cost of living and increased income levels over the years, there’s been a growing demand to revise the ceiling limit again.
Why Another Amendment Is Essential for Employees
With inflation affecting incomes, employees have long been advocating for a new wage ceiling revision. If implemented, this amendment could benefit millions of employees, enhancing both their pension amounts and overall social security after retirement.