The Union Cabinet is expected to take up a proposal on Wednesday to increase the wage ceiling for mandatory coverage under the Employees’ Provident Fund (EPF) and Employees’ Pension Scheme (EPS) from Rs 15,000 to Rs 25,000, according to people familiar with the matter.
If approved, the move would expand the salary threshold used to determine which employees are required to come under EPF and EPS coverage.
Rs 15,000 Ceiling Has Remained Unchanged Since 2014
The existing Rs 15,000 wage ceiling has been in place since September 1, 2014. The threshold is used to determine the salary level up to which employees are mandatorily covered under the two social security schemes.
The proposed increase to Rs 25,000 would therefore mark a change to the ceiling that has remained unchanged for more than a decade.
Employer Contribution May Not Increase Automatically
An increase in the coverage ceiling would not necessarily result in a corresponding rise in the mandatory contribution made by employers.
Companies could continue calculating their mandatory contributions based on the existing Rs 15,000 ceiling. Under such an arrangement, employees earning up to Rs 25,000 could come under mandatory EPF and EPS coverage, while the employer’s mandatory contribution would remain capped at the current level.
The proposal is expected to be considered by the Union Cabinet as part of the government’s review of the existing EPF and EPS coverage framework.