The government has increased the Employees’ Provident Fund (EPF) wage ceiling from Rs 15,000 to Rs 25,000. It means employees earning up to Rs 25,000 plus dearness allowance (DA) can now enrol for the EPF, Employees’ Pension Scheme (EPS) and the Employees’ Deposit-Linked Insurance (EDLI) Scheme provided their organisation is a member of the Employees’ Provident Fund Organisation (EPFO).
The EPFO in a social media post on X (formerly Twitter) has encouraged employees earning up to Rs 25,000 in basic pay to contact their employer and get enrolled for the EPF, EPS and the EDLI schemes.
The EPFO has suggested to such employees what they should do to get enrolled for these social security schemes.
What should you do to get enrolled for the EPF, EPS and the EDLI schemes?
In its tweet, the EPFO says that if you are earning up to Rs 25,000 basic pay per month, ensure you security coverage by contacting your employer today and get enrolled under the EPF.
The EPFO says that by doing so, you can get social security, pension benefits, life insurance up to Rs 7 lakh and the provident fund.
What should you do if your employer’s EPS contribution is missing?
In a separate tweet, the EPFO says that if you are an eligible EPS member and your employer’s EPS contribution is missing, you should first contact the employer and inform them about the missing contribution. If the issue is not resolved, you can raise a grievance through the EPFiGMS portal.
How employees can create retirement fund, get pension and medical cover through EPFO membership
EPFO membership can help employees build a retirement corpus, receive a pension after retirement and provide financial protection to their families through a life insurance cover.
Contributions from both the employee and the employer help create a retirement corpus.
Here is how the EPF, pension and insurance benefits work and what employees earning up to Rs 25,000 basic pay should know.
How Rs 25,000 wage ceiling can help employees create a retirement corpus
When an employee joins the EPF scheme, a monthly contribution from their salary is added to their EPF account. Their employer also contributes to their EPF account. The employee gets interest over these contributions. When the contributions are compounded over the years, employees can build a sizable corpus by the time they retire at 58 years of age.
Before the government increased the wage ceiling, the minimum contribution from the employee and the employer’s sides for an employee earning at the wage ceiling was Rs 1,800 per month. After the increase in the wage ceiling, the minimum contribution for the same employee’s EPF account from his and his employer’s side has increased to Rs 3,000 each. A higher contribution from both sides’ means a larger EPF corpus at retirement.
How high wage ceiling can impact employee’s EPS pension
Employees with a basic salary of Rs 25,000 or less would be eligible to join the EPS scheme in addition to the EPF. Under the EPS, subscribers are eligible to get a monthly pension at retirement if they have completed 10 years of service.
As far as the EPS scheme is concerned, an employer contributes to the EPS account of an employee. The contribution at the wage ceiling was Rs 1,250 per month earlier, which has now been increased to Rs 2,083. Since the contribution is more now, EPS beneficiaries can expect a higher pension.
How high wage ceiling may impact your EDLI insurance cover
According to the current EDLI rules, if an EPF member dies while on duty, their nominee is entitled to a minimum of Rs 2.5 lakh and a maximum of Rs 7 lakh in insurance benefits. The maximum benefit is calculated at the wage ceiling. Since the wage ceiling has increased, the maximum benefit may also increase. However, the government is yet to announce an increase in the maximum EDLI cover.
Will employees earning between Rs 15,000 and Rs 25,000 become eligible for EPFO coverage?
Yes. The principal impact of the revision is to extend the mandatory coverage threshold from Rs 15,000 to Rs 25,000 per month, bringing eligible employees in this wage range within the expanded statutory coverage. For example, an employee joining today at a monthly wage of Rs 20,000 is currently outside the EPF and EPS systems; under the revised ceiling, such an employee would be required to be enrolled in both, creating a more robust social security safety net for the employee and their family.
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