EPFO Wage cap rise: The Employees’ Provident Fund Organisation is now thinking about raising the salary limit that decides who must join the provident fund and pension system. Right now, the limit stays at Rs 15,000 per month. This number has not changed since 2014 when it went up from Rs 6,500. Anyone who earns up to Rs 15,000 must join EPF and EPS, but people earning even a little more can skip it. This rule has left many workers without any pension savings even though they earn low or middle incomes.
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At a meeting in Mumbai, Department of Financial Services Secretary M Nagaraju said that the situation needs to change. He said, “It is very bad that so many people earning just above Rs 15,000 have no pension cover and end up relying on their children in old age.”
What Change EPFO is Planning?
Reports now say that EPFO may raise the wage ceiling from Rs 15,000 to Rs 25,000. The Central Board of Trustees may take up this plan early next year. An internal study by the labour ministry says that if the limit goes up by Rs 10,000, more than one crore extra workers will come under mandatory EPF and EPS rules, reported Business Today. Trade unions have asked for this change for many years because living costs have gone up and salaries have changed a lot since the limit was last revised.
If the rule changes more workers will start saving for their future through PF. Employees pay 12% of their basic salary and employers also pay 12%. When the salary base becomes larger, both sides will put in more money. This means the worker’s savings will grow faster and the pension amount will also become better in the long run.
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EPFO already manages a huge fund of Rs 26 lakh crore and has 7.6 crore active members. Bringing more people into the system will make India’s pension coverage much bigger.
Changes Coming to the EPS System
The Employees’ Pension Scheme has also gone through many updates to make it safer and more useful for workers. The biggest update raises the waiting time for withdrawing EPS money. Before, a worker could take out the EPS amount after two months of unemployment. Now the waiting time is 36 months. This means a person can only withdraw the money after three years.
The government is also looking at the minimum pension under EPS, which is still Rs 1,000 per month. This number has not changed for 11 years. The Parliamentary Standing Committee has told the government to raise it.
EPFO has also built a new digital system called CPPS for pension payments. Now pensioners can get their money from any bank branch without filing a request to shift their pension account.
EPFO also cleared a long-running confusion about higher pensions. It said that employees who paid EPS contributions based on their actual higher salary, and whose payments were accepted, will now get a higher pension.
