Cabinet raises EPFO wage ceiling to Rs 25,000 from Rs 15,000

The government has raised the monthly wage ceiling for Employees’ Provident Fund Organisation (EPFO) coverage to Rs 25,000 from Rs 15,000, Union minister Ashwini Vaishnaw said at a Cabinet briefing on Wednesday.

The government will spend around Rs 11,339 crore every year as part of the move, which is aimed at widening social security coverage for employees.

Vaishnaw said the broader coverage would provide greater stability to employees and help employers retain their workforce.


The decision raises the wage threshold used for EPFO coverage by Rs 10,000 a month, expanding the pool of employees eligible for the benefit.

What does this mean?

The change will bring employees earning between Rs 15,000 and Rs 25,000 a month within the mandatory social security framework. In practical terms, more workers will now be covered by the formal retirement and social security system instead of having to remain outside mandatory EPF coverage because their wages exceed the earlier ceiling.

For eligible employees, the expanded coverage means access to provident fund savings, pension protection and insurance cover, subject to the applicable scheme provisions. It also makes these statutory benefits available to a larger section of the formal workforce.

Over 51 lakh more employees to benefit

The government expects the higher wage ceiling to bring more than 51 lakh additional employees under mandatory social security coverage.

The proposal was moved by the Ministry of Labour and Employment and approved by the Union Cabinet chaired by Prime Minister Narendra Modi.

What benefits are covered?

The expanded framework will provide access to the Employees' Provident Fund, pension benefits under the Employees' Pension Scheme (EPS) and insurance protection under the Employees' Deposit Linked Insurance Scheme (EDLI), subject to applicable provisions.

Why was the ceiling revised?

The EPFO wage ceiling was last revised in September 2014, when it was increased to Rs 15,000. Before that, the ceiling had remained unchanged between 2004 and 2014.

The government said the latest revision takes into account sustained wage growth, rising incomes and the expansion of formal employment over the intervening period.

What will it cost the government?

The annual government expenditure following the enhancement is estimated at Rs 11,339 crore, compared with existing annual budgetary support of around Rs 10,250 crore. Over five years, the estimated expenditure is around Rs 56,696 crore.

EPFO in numbers

EPFO currently administers the Employees' Provident Fund, Employees' Pension Scheme and Employees' Deposit Linked Insurance Scheme.

According to the latest EPFO data cited by the government, EPFO has around 7.98 crore contributing members across about 7.68 lakh contributing establishments. The EPS provides pension benefits to around 82 lakh pensioners.