The Employees' Provident Fund Organisation (EPFO) is reportedly considering a proposal to increase the mandatory PF and pension coverage limit from ₹15,000 to ₹25,000 per month. This revision aims to expand India's social security network, potentially bringing over 10 million additional workers under the provident fund and pension umbrella.
Currently, only employees earning ₹15,000 or less in basic salary are required to be enrolled under the Employees' Provident Fund (EPF) and the Employees' Pension Scheme (EPS). Those earning above this limit can opt out, leaving a significant portion of the workforce without mandatory retirement protection. The proposed revision would make it mandatory for employees earning up to ₹25,000 per month to be covered under the EPF and EPS.
According to internal assessments by the Labour Ministry, increasing the wage ceiling by ₹10,000 could bring over one crore additional workers under mandatory EPF and EPS coverage. Labour unions have long argued that the ₹15,000 threshold no longer reflects current wage structures or cost-of-living realities, especially in metro cities. Department of Financial Services (DFS) Secretary M Nagaraju highlighted the urgency behind the review, stating that many people earning just above ₹15,000 lack pension cover and may end up relying on their children in old age.
If the proposal is approved, employees will build consistent savings through compulsory monthly PF contributions, although their immediate take-home pay may decrease slightly. Both the employee and employer contribute 12% of the basic pay each month. A larger PF will also lead to stronger pension benefits over time.
The proposal is likely to be reviewed by the EPFO's Central Board of Trustees in its next meeting, expected around December 2025 or January 2026. If cleared, the new wage ceiling of ₹25,000 could take effect in the first half of 2026.
The EPFO is also planning a major reform to the Employee Pension Scheme (EPS-95) by proposing to raise the salary cap for pension calculation from ₹15,000 to ₹25,000. This move, part of the upcoming “EPFO 3.0” reform, aims to boost pension savings and improve retirement benefits for over 6.5 crore salaried employees. If implemented, the employer's EPS contribution will increase from Rs 1250 to Rs 2083 per month, enhancing long-term pension payouts. Under the new proposal, a higher pension contribution of Rs 2,083 per month (8.33 percent of Rs 25,000) would be allowed. This represents a 66 percent jump in contribution and could significantly raise monthly pension payouts for employees in the long term.
The current cap of ₹15,000 per month has been in place since it was raised from ₹6,500 in 2014. The proposed change could strengthen the financial safety net for millions of workers and retirees.
