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New Delhi : The Union Cabinet on Wednesday approved an increase in the wage ceiling for mandatory coverage under the Employees’ Provident Fund Organisation (EPFO) to Rs 25,000 per month from Rs 15,000, a move expected to bring more than 51 lakh additional employees under mandatory social security coverage.
The decision was announced by Union Minister Ashwini Vaishnaw during a briefing following the Cabinet meeting.
According to a release issued by the govt, the proposal to raise the wage ceiling by Ministry of Labour and Employment was approved by the Union Cabinet chaired by Prime Minister Narendra Modi.
With the ceiling now raised to Rs 25,000, employees falling in the Rs 15,000-Rs 25,000 monthly wage band will come within the statutory social security framework.
The move will expand access to provident fund savings, pension protection under the Employees’ Pension Scheme (EPS) and insurance protection under the Employees’ Deposit Linked Insurance Scheme (EDLI), subject to applicable scheme provisions.
The EPFO wage ceiling was last revised in September 2014, when it was increased to Rs 15,000. Prior to that, the ceiling had remained unchanged between 2004 and 2014.
The government said the latest revision reflects sustained wage growth, rising incomes and the expansion of formal employment over the intervening period.
The annual government outgo following the enhancement is estimated at about Rs 11,339 crore, compared with the existing annual budgetary support of around Rs 10,250 crore. The estimated expenditure over five years is about Rs 56,696 crore.
The government expects the measure to support further formalisation of employment, improve long-term retirement security and widen access to portable statutory social security benefits.
EPFO currently administers the Employees’ Provident Fund, Employees’ Pension Scheme and Employees’ Deposit Linked Insurance Scheme.
According to the latest EPFO data cited by the government, the organisation has around 7.98 crore contributing members across about 7.68 lakh contributing establishments, while the EPS provides pension benefits to around 82 lakh pensioners.
The Ministry of Labour and Employment and EPFO will now undertake the necessary statutory and administrative steps to implement the Cabinet decision. (Agencies)
