India's EPFO wage ceiling raised to ₹25,000 from ₹15,000; to cover 51 lakh more employees

New Delhi: The Union Cabinet has approved a proposal to raise the wage ceiling for mandatory coverage under the Employees’ Provident Fund Organisation (EPFO) from ₹15,000 to ₹25,000 a month. The move is expected to bring more than 51 lakh additional employees under mandatory EPFO coverage.

The revised ceiling will cover employees earning between ₹15,000 and ₹25,000 who are currently outside mandatory EPF coverage. They will gain access to provident fund savings, pension benefits under the Employees’ Pension Scheme (EPS) and insurance cover under the Employees’ Deposit Linked Insurance Scheme (EDLI), subject to the applicable scheme provisions.

The government said it last revised the ceiling in September 2014, when it raised it to ₹15,000 from the previous level. The latest increase reflects wage growth, rising incomes, and the expansion of formal employment over the past decade.

The Expenditure Finance Committee recommended the proposal at its June 16, 2026 meeting after inter-ministerial consultations. The government estimates an annual additional expenditure of around ₹11,339 crore, compared with the existing annual budgetary support of about ₹10,250 crore. The estimated expenditure over five years is ₹56,696 crore.

EPFO currently has around 7.98 crore contributing members across 7.68 lakh establishments, while the Employees’ Pension Scheme provides benefits to about 82 lakh pensioners.

The government said the move would strengthen social security coverage and support the formalisation and retention of workers. The Labour Ministry and EPFO will undertake the necessary statutory and administrative steps to implement the decision.

Pro-rata: Pension fund contributions to rise, but higher pension will take time
At the same time, raising the EPFO wage ceiling to ₹25,000 will increase contributions to the pension fund, but the benefit might not immediately translate into higher pension payouts.

Under the Employees’ Pension Scheme (EPS), pension is calculated on a pro-rata basis, based on the salary ceilings applicable during different periods of an employee’s service. Hence, the revised ₹25,000 ceiling will apply only to service completed after the new limit takes effect.

With the earlier ₹15,000 ceiling, the maximum pension for 35 years of service was ₹7,500. Under the revised ceiling, the maximum will rise to ₹12,500.
(With inputs from Malayala Manorama correspondent K Sunilkumar)