The Union Cabinet has approved raising the statutory monthly wage ceiling for mandatory coverage under the Employees' Provident Fund Organisation (EPFO) from Rs 15,000 to Rs 25,000. The revised ceiling has taken effect from September 17, 2026, expanding mandatory social security coverage to more than 51 lakh additional formal-sector employees.
The decision, announced on September 16, is also the first revision to the EPFO wage ceiling since September 2014, when the limit was increased to Rs 15,000. The 66% increase is aimed at bringing workers earning between Rs 15,000 and Rs 25,000 a month within the statutory social security framework.
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Union Labour Minister Dr. Mansukh Mandaviya cited a government survey stating that the average salary in private establishments has increased up to Rs 23,000 per month, updating the official limit was critical to matching economic realities.
EPF, Pension and Insurance Benefits
Employees newly brought under mandatory EPFO coverage will receive benefits under the Employees' Provident Fund, Employees' Pension Scheme and Employees' Deposit Linked Insurance Scheme, subject to the applicable scheme provisions.
The EPF provides retirement savings, while the EPS offers pension benefits. EDLI provides insurance coverage to eligible employees. The move is expected to widen the formal social security net and strengthen long-term retirement protection for workers.
The expanded coverage will increase the government's estimated annual expenditure to around Rs 11,339 crore, compared with the existing budgetary support of approximately Rs 10,250 crore. Over five years, the government's estimated financial commitment is around Rs 56,696 crore.
The proposal was recommended by the Expenditure Finance Committee on June 16, 2026.
EPFO currently has around 7.98 crore contributing members across approximately 7.68 lakh contributing establishments, while around 82 lakh pensioners are covered under the Employees' Pension Scheme.
Reactions to the Decision
Labour unions and industry groups have responded differently to the revision. The All India Trade Union Congress (AITUC) called the Cabinet's hike of the EPFO wage ceiling to Rs 25,000 a "belated response," noting that the long-pending demand had been ignored for 12 years.
“Yet the government did not heed, depriving millions of workers earning above Rs 15,000 of the mandatory EPFO coverage. It is therefore impossible to welcome the present decision, neither as a timely measure nor an adequate one in terms of the ceiling,” as per AITUC statement.
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The revised wage ceiling is expected to broaden the reach of EPFO-linked savings, pension and insurance benefits as more workers earning up to Rs 25,000 a month enter mandatory coverage.
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