EPFO New Rule: The Employees’ Provident Fund Organisation (EPFO) is reportedly mulling the wage ceiling to ₹25,000 for compulsory inclusion of workers in the Employees’ Provident Fund (EPF) and the Employees’ Pension Scheme (EPS), Moneycontrol reported quoting sources.

The Central Board of Trustees of the EPFO is likely to take up the matter for discussion in its next meeting, which is expected to be held in December or January, an official quoted by Moneycontrol said. A final approval for the new EPFO rule could be given in the meeting, the report said.

Livemint could not verify the authenticity of the report. This article will be updated if the government or EPFO issues a statement regarding the same.

The current EPFO wage ceiling is ₹15,000 per month.

According to the official quoted by the news outlet, the new EPFO rule could benefit 10 million additional employees.

“As per an internal assessment of the labour ministry, the ₹10,000 per month increase in the wage ceiling would make social security benefits mandatory for over 10 million more individuals,” Moneycontrol reported quoting the official.

The official further said that many employees in metro cities get more than ₹15,000 basic pay, which makes it optional for them to be an EPFO member.

“The labour unions have been seeking a raise (on wage limit) for a long time as monthly salaries of several low or mid-skilled workers in many metro cities are more than 15,000 per month. A higher ceiling would make them part of EPFO,” the report said, citing the person.

What is EPFO wage ceiling?

The EPFO wage ceiling is the maximum monthly basic salary on which mandatory PF contributions and EPS are calculated, and is governed by the retirement funds body.

Employees who earn more than ₹15,000 as basic pay can opt out of EPF and EPS schemes. Employers also do not have a mandate to register such employees and give PF contributions for them.

If an employee’s basic salary is ₹15,000 or less, he or she must be enrolled under EPF and EPS. The employer and employee must contribute 12 per cent of their salaries as PF (provident fund).

EPFO new rules

Earlier this month, retirement body EPFO approved liberalised part withdrawals for its more than seven crore subscribers.

A provision has been made for earmarking 25 per cent of the contributions in the Members’ account as Minimum Balance to be maintained by the member at all times.

The remaining 75 per cent can be withdrawn by employees.

The EPFO further decided to change the period for availing premature final settlement of EPF from the existing 2 months to 12 months and final pension withdrawal from 2 months to 36 months.