Cabinet Approves Significant Expansion of Social Security
The Union Cabinet, led by Prime Minister Narendra Modi, has given its nod to a proposal to elevate the mandatory wage ceiling for coverage under the Employees' Provident Fund Organisation (EPFO). The cap, previously set at ₹15,000 per month, will now increase to ₹25,000 per month, a move poised to significantly broaden India's social security net.
This crucial decision is projected to extend statutory social security coverage to more than 51 lakh (5.1 million) additional employees. These workers will now gain access to a comprehensive suite of benefits, including provident fund savings, pension protection under the Employees’ Pension Scheme (EPS), and insurance coverage through the Employees’ Deposit Linked Insurance Scheme (EDLI).
This marks the first revision to the EPFO wage ceiling since September 2014, when it was last adjusted to ₹15,000. The government cited sustained wage growth, a general rise in incomes, and the expansion of formal employment across various sectors over the past decade as key factors necessitating this enhancement.
Previously, employees commencing a job with a monthly wage exceeding ₹15,000 were not automatically included in the mandatory EPF framework. With the new ceiling of ₹25,000, individuals earning between ₹15,000 and ₹25,000 per month will now be brought under mandatory EPFO coverage, ensuring greater financial security and retirement planning for a broader segment of the workforce.