The central government is likely to announce good news for wage earners soon. Reports indicate that the Employees’ Provident Fund Organisation (EPFO) plans to increase the wage limit.
The EPFO maximum wage limit is Rs. 15,000, but it may be raised to Rs. 21,000. The government intends to decide on this matter and announce it as soon as possible.
Multiple national media reports have cited reliable sources for this information. Additionally, it has been suggested that company registration with the EPFO will become mandatory based on the number of employees, and the requirement for the number of employees may also be reduced.
Companies with 20 or more employees must register with the EPFO, but this threshold may be lowered to between 10 and 15 employees.
However, small and medium-sized enterprises have vehemently opposed this proposal. While increasing the wage limit may burden the government and the private sector, it would benefit employees.
Benefits for Employees: Companies must make monthly deposits to the provident fund based on employees’ basic salaries and dearness allowance (DA).
Specifically, 12 percent of the employee’s salary, matched by another 12 percent from the employer, goes into the provident fund (PF) account.
If the central government raises the wage limit from Rs. 15,000 to Rs. 21,000, the amount deposited into employees’ PF accounts will increase accordingly.
Consequently, funds available for employees’ retirement will grow. Of the 12 percent contribution made by companies to the PF, 8.33 percent goes toward the employee’s pension account, and the remaining 3.67 percent is allocated to the PF account.
Employee contributions will be entirely directed to the PF account. If the wage limit increases, the contributions of employees and employers to the PF will rise proportionally.
This would enable employees to accumulate a larger provident fund balance by retirement. Additionally, 1.16 percent from the government will be added to the employees’ pension scheme.
Last Increase in 2014: The last adjustment to the salary limit occurred in 2014 when it was raised from Rs. 6,500 to Rs. 15,000. This scheme was initiated in 1952, and since then, the salary limit has been increased eight times.