EPFO Wage Boost: Retirement Body May Hike Ceiling To Rs 25,000 — How Will You Be Affected?
Some experts anticipate resistance from employees in the lower and middle-income brackets, who prefer higher in-hand salaries over deductions for PF.
The Employee Provident Fund is considering to hike the wage ceiling to Rs 25,000 from the present Rs 15,000, for mandatory inclusion of workers in the Employees' Provident Fund and the Employees' Pension Scheme, as per reports.
The matter will most likely be brought up and debated in the upcoming meeting of the Central Board of Trustees of the retirement body in December. The reports also stated that a decision could be finalised by the end of this meeting.
Close to 1 crore employees can be benefited by this hike of Rs 10,000 per month, the reports cited, quoting a person in the know.
"As per an internal assessment of the labour ministry, the Rs 10,000 per month increase in the wage ceiling would make social security benefits mandatory for over 10 million more individuals," it said.
The revision is making long-term financial protection and retirement benefits accessible to a larger work segment. The decision holds much relevance in an erstwhile volatile space of financial benefits.
Some experts anticipate resistance from employees in the lower and middle-income brackets, who prefer higher in-hand salaries over deductions for PF. While others say that it could curb avoidance practices and improve payroll transparency, even as it increases statutory costs and compliance for employees.
Earlier in the month, EPFO had given a go-ahead to liberalised part withdrawals for its more than seven crore subscribers. The minimum balance was brought down to 25% of the employees' contributions in the Members’ account.
How Does The Wage Ceiling Work?
The EPFO wage ceiling is the maximum monthly salary, governed by the retirement funds body, on the basis of which mandatory PF contributions and EPS are calculated.
If an employee's basic salary is Rs 15,000 or less, they must be enrolled under EPF and EPS and must contribute 12% of their salaries as provident fund. However, that now has changed since the ceiling has been hiked.
The total corpus of EPFO presently is approximately Rs 26 lakh crore, and the number of active members is around 7.6 crore.
