Panel backs raising monthly EPFO wage ceiling to ₹21,000

A high-level committee has backed a proposed increase in wage ceiling under the Employees' Provident Fund Organisation (EPFO) to ₹21,000 a month from the current ₹15,000.

The committee has, however, said the government can implement the increase from a later date considering all inputs.

The proposal, once implemented, will bring an estimated 7.5 million additional workers within the fold of the scheme, and also adjust for the increase in wages as the last revision was done in 2014.


"The ad-hoc committee on EPFO coverage has agreed to enhance (waged under) EPF Act to align with ESI establishment," a senior government official told ET, adding that it has suggested the implementation to be considered at a later stage and not immediately.

The suggestion, if accepted by the central board of the trustees of EPFO, will give a breather to the employers who are reluctant to immediately take on any additional financial burden.

Employers had in their consultations cited stress on their balance sheets due to the outbreak of the pandemic and sought more time for implementing the proposed increase.

It will also be a relief for the exchequer as the Centre currently pays about ₹6,750 crore every year to the Employees' Pension Scheme of the EPFO. The government contributes 1.16% of the total basic wage of EPFO subscribers towards the scheme.

Under the current rules, any company with more than 20 employees must register with the EPFO and the EPF scheme is compulsory for all employees earning less than ₹15,000.

The increase in the limit to ₹21,000 will bring more workers under the retirement scheme. It will also align the ceiling with the other social security scheme Employees' State Insurance Corporation (ESIC) where the limit is ₹21,000.

KE Raghunathan, an employer's representative on the central board of the trustees of the EPFO, said there is a consensus within the EPFO that similar norms should be followed for providing social security under both EPFO and ESIC.

"Workers should not lose out on the benefits of their social security because of the difference in norms under the two schemes," he said.

Labour unions are, however, apprehensive the decision may take a very long time to implement.

"Lots of hurdles are in the way to implement this including the required approval from the finance ministry," a trade union representative said requesting not to be identified.