By raising the limit to ₹21,000, more employees will be covered under the retirement scheme. This will also align the limit with other social security scheme Employees State Insurance Corporation (ESIC) where the limit is ₹ 21,000
A high-level committee has proposed to increase the wage ceiling under the Employees’ Provident Fund Organization (EPFO) to Rs 21,000 per month from the existing Rs 15,000. However, the committee has said that the government can implement the hike from the back date after considering all the proposals.
The proposal, once implemented, will bring an estimated 7.5 lakh additional workers under the purview of the scheme, and will also adjust for the increase in wages as last amended in 2014.
A senior government official said, “If this suggestion is accepted by the Central Board of Trustees of EPFO, it will give relief to the employers who are willing to immediately bear any additional financial burden. are reluctant.”
The employers in their consultations cited stress on their balance sheets due to the outbreak of the pandemic and sought more time to implement the proposed hike.
This will also be a relief for the exchequer, as the Center currently pays around Rs 6,750 crore every year towards the Employees’ Pension Scheme of EPFO. The government contributes 1.16 per cent of the total basic salary of EPFO subscribers for this scheme.
Under the existing rules, any company with more than 20 employees must be registered with the EPFO and the EPF scheme is mandatory for all employees with an income of Rs 15,000.
By raising the limit to ₹21,000, more employees will be covered under the retirement plan. This will also align the limit with other social security scheme Employees State Insurance Corporation (ESIC) where the limit is ₹ 21,000.
KE Raghunathan, an employer’s representative on the EPFO’s central board of trustees, said there is a general consensus within the EPFO that the same norms should be followed for providing social security under both EPFO and ESIC.
“The difference in norms under both the schemes should not deprive workers of their social security benefits,” he said. However, trade unions are apprehensive that the decision may take too long to implement.
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