Centre’s flagship provident fund body, Employees’ Provident Fund Organisation (EPFO) is likely to increase its salary ceiling limit from existing Rs15,000 to Rs21,000 per month.
EPFO aims to provide financial security to its members post retirement. Companies with more than 20 employees are mandated to abide by the EPFO guidelines.
Under the current rules, an employee earning salary under Rs 15,000 is mandatorily to register himself under EPFO while employers have to make a matching contribution of 12 percent of the workers’ basic salary toward EPFO. The government contributes around 1.16 percent to the employees’ pension scheme annually.
Out of 12% contribution made by the employer, 8.33% goes to the pension account of the beneficiary.
The rise in the ceiling limit will further increase the contribution limits for both employers and employees working under them along with the government’s contribution.
An additional 7.5 million workers are expected to come under the ambit of EPFO after the hike in the salary upper limit. Currently, there are about 68 million workers registered under EPFO.
The EPFO ceiling limit had been changed from Rs. 6,500 to 15,000 in 2014.