New Delhi: The Union Cabinet has approved a major expansion of mandatory provident fund coverage by increasing the monthly wage limit for EPFO enrolment from Rs 15,000 to Rs 25,000.
Union Minister Ashwini Vaishnaw announced the decision following the Cabinet meeting on Wednesday, saying the measure would extend statutory social-security protection to more than 51 lakh additional employees.
The government is expected to incur an annual expenditure of approximately Rs 11,339 crore on the expanded coverage. The higher limit is intended to bring more employees into the organised social-security system and strengthen their long-term financial protection, as reported by The Economic Times.
Vaishnaw said the move would offer greater security to workers and could also help companies retain employees. With the threshold raised by Rs 10,000 a month, workers who previously fell outside compulsory EPF coverage because of their wages will now be included.
Employees In Rs 15,000-Rs 25,000 Bracket
The revised rule will primarily affect employees earning more than Rs 15,000 but not exceeding Rs 25,000 a month. They will now fall within the mandatory EPFO framework, subject to the rules governing the schemes.
Until now, workers in this wage range were not required to be enrolled under EPF solely because their monthly pay crossed the earlier statutory limit. The Cabinet’s decision expands the number of employees linked to the formal retirement and social-security network.
The move will enable eligible workers to receive provident fund, pension and insurance-related benefits under the applicable EPFO provisions.
Govt Estimates 51 Lakh New Additions
Officials expect the revised ceiling to add over 51 lakh employees to the compulsory social-security system.
The Ministry of Labour and Employment had submitted the proposal. It was approved by the Union Cabinet under the chairmanship of Prime Minister Narendra Modi.
The government has described the decision as a step towards increasing social-security coverage among formal-sector workers.
PF, Pension & Insurance Protection
Employees brought under the expanded coverage will be eligible for benefits linked to three major EPFO schemes: The Employees’ Provident Fund, which helps workers accumulate retirement savings; the Employees’ Pension Scheme, which provides pension support under its applicable rules, the Employees’ Deposit Linked Insurance Scheme, which provides insurance cover to eligible members.
The precise benefits available to an employee will depend on the conditions and provisions applicable to each scheme.
Ceiling Unchanged For 12 Years
The previous EPFO wage ceiling of Rs 15,000 was introduced in September 2014. Before that revision, the limit had remained unchanged for a decade, from 2004 to 2014.
The Centre said the latest increase was necessary because wages and incomes have grown considerably since the previous revision. The expansion of formal employment was also cited as a factor behind the decision.
Centre To Spend Rs 11,339 Crore Annually
The enhanced coverage is expected to increase the government’s yearly expenditure to about Rs 11,339 crore. At present, the Centre provides around Rs 10,250 crore annually in budgetary support.
The projected cost over five years is estimated at approximately Rs 56,696 crore.
EPFO’s Membership Base
EPFO administers the Employees’ Provident Fund, the Employees’ Pension Scheme and the Employees’ Deposit Linked Insurance Scheme.
Government figures cited in connection with the decision show that EPFO has nearly 7.98 crore contributing members and around 7.68 lakh contributing establishments. The pension scheme provides benefits to approximately 82 lakh pensioners.