The Employees’ Provident Fund Organisation (EPFO) is preparing for a significant policy change that could impact millions of salaried employees across India. According to official sources, the Central Board of Trustees (CBT) of EPFO is considering a proposal to increase the salary limit for mandatory Provident Fund (PF) and Pension Scheme participation from ₹15,000 to ₹25,000 per month.
If approved, this move could bring nearly one crore additional employees—especially from the private sector—under the umbrella of social security and retirement benefits. The proposal is expected to be discussed in EPFO’s next board meeting, which may take place in December 2025 or January 2026.
As per existing rules, only employees earning up to ₹15,000 per month are required to be covered under the EPF (Employees’ Provident Fund) and EPS (Employees’ Pension Scheme). Workers with salaries exceeding this limit can opt out, and employers are not legally obliged to contribute on their behalf.
This rule was introduced years ago, but with inflation and rising living costs, the current wage ceiling no longer reflects today’s economic realities. Many mid-level and skilled workers earning slightly above ₹15,000 remain excluded from social security coverage.
Labor unions have long been advocating for a higher wage ceiling. They argue that the ₹15,000 threshold excludes a large segment of the workforce, especially in metros where even entry-level wages often exceed this limit. Raising the cap to ₹25,000, they say, would ensure broader social protection and align with current cost-of-living standards.
Under the current system:
Both the employer and employee contribute 12% of the employee’s basic salary each month.
The employee’s full 12% goes into the EPF account.
The employer’s 12% is divided into two parts — 3.67% for EPF and 8.33% for EPS.
This dual contribution ensures that employees build both a retirement savings corpus and a monthly pension entitlement.
Officials believe that increasing the salary ceiling would significantly boost the overall EPFO corpus, which currently stands at around ₹26 lakh crore and serves nearly 7.6 crore active members. A higher contribution base would mean:
More funds for long-term investment,
Higher pension payouts, and
Better interest accumulation for employees upon retirement.
Financial experts also see this step as a positive move toward expanding social security coverage. It would encourage long-term financial discipline among the workforce and enhance retirement safety nets for millions.
While the proposal has been widely welcomed, it could bring additional responsibilities for employers.
According to Adil Ladhha, Partner at Saraf & Partners, increasing the EPFO wage limit would “raise the statutory costs and compliance requirements” for companies, as more employees would become eligible for PF contributions.
However, Ladhha also points out the positive side — the move would improve transparency in payroll systems. Companies would need to maintain clearer records of salaries, deductions, and contributions, reducing loopholes and ensuring fair treatment for employees.
Not everyone is cheering the proposed change. Some experts believe that certain employees, especially those in the lower and mid-income categories, might resist the move. Suzanne Talwar, Co-founding Partner at Economic Laws Practice, explained that as the wage ceiling increases, employees will see a larger portion of their salary deducted for provident fund contributions.
This means a temporary reduction in in-hand salary, which could discourage workers who rely heavily on immediate cash flow. Although the long-term benefits—like higher savings and pension—are undeniable, the short-term dip in take-home pay might not appeal to everyone.
If approved, the proposed revision could mark a transformative step for India’s workforce, extending social security coverage to a much larger segment of salaried professionals. While it may increase employers’ compliance load and reduce employees’ in-hand pay initially, it promises a more stable and secure financial future for millions in the long run.
As the EPFO board prepares to deliberate on this major policy change, all eyes will be on the outcome of the upcoming meeting, which could redefine the scope of retirement benefits for private-sector employees in India.
