EPFO wage ceiling hiked 66.7% to ₹25,000, bringing more workers under cover

The government has increased the statutory wage ceiling for mandatory EPF coverage from ₹15,000 to ₹25,000 a month, effective September 17, 2026, expanding the pool of workers who can receive benefits under the country's formal social security system.

The revision primarily affects employees earning between ₹15,000 and ₹25,000 per month who join establishments covered by EPFO. Under the earlier ceiling, workers above ₹15,000 were generally outside mandatory coverage when they entered such establishments, subject to applicable EPF rules. The higher threshold is expected to bring about 51 lakh more employees under the EPF framework.

For an employee, the change means a part of their salary will go towards building retirement savings. Where contributions are calculated on the full eligible basic wage, the employee normally contributes 12 per cent, while the employer makes a matching contribution. A portion of the employer's contribution is allocated to the Employees' Pension Scheme (EPS), with the remainder going towards EPF, as prescribed under the rules.

For instance, on a basic wage of ₹20,000, an employee contribution at 12 per cent would amount to ₹2,400 a month. The immediate take-home salary would therefore be lower by that amount, but the worker would accumulate provident fund savings while also gaining access to pension and insurance-linked benefits.

The expanded coverage provides access to EPF, EPS and EDLI, strengthening financial protection for workers during retirement and in specified contingencies.

The wage ceiling had been fixed at ₹15,000 since September 2014. Raising it to ₹25,000 represents an increase of ₹10,000, or about 66.7 per cent.

The government has estimated additional annual expenditure of about ₹11,339 crore due to the revision. The move comes alongside measures to encourage formal employment, including incentives under the Pradhan Mantri Viksit Bharat Rozgar Yojana (PMVBRY).

EPFO members currently earn an approved 8.25 per cent annual interest rate, while eligible online claims of up to ₹5 lakh can be auto-settled within three working days.