The Central Board of Trustees (CBT), the highest decision-making body of the Employees’ Provident Fund Organisation (EPFO), is likely to give the go-ahead for a proposal to raise the wage ceiling for mandatory EPF cover to Rs 25,000 a month from Rs 15,000 now for organised-sector workers. The proposal, which would require to be notified by the government subsequently, would raise the number of active EPF subscribers by around 50 lakh to 4.5 crore if implemented, sources in the labour ministry said.
While an employee contributes 12% of the basic pay to EPF, the employer contributes 8.33% towards employees’ pension scheme and 3.67% to the EPF itself. Additionally, employers also pay 0.5% towards EDLI, 0.65% as EPF administrative handling fee, taking the total contribution to 13.15%.
Though the threshold exists for mandatory cover, employers and workers can opt for the scheme even if the salary levels are higher.
The EPFO’s wage threshold was last raised in November 2014 from Rs 6,500 a month. The wage threshold for medical/cash and insurance benefits under the Employees’ State Insurance Corporation (ESIC) was raised last year to Rs 21,000 per month, from Rs 15,000 previously.
The EPFO had earlier written to the labour ministry requesting it to raise the EPF wage limit to Rs 25,000, given the recent hike in the minimum wages by the Centre for workers in 45 scheduled employment categories.
Sources said the proposal to raise the EPF limit could face some resistance from employers’ representatives, as many believe that this would be a great pain, particularly for small-scale industries; but employees’ representatives are gung-ho as it would bring more employees under the social security net.
As reported by FE earlier, the EPFO is also planning to make inroads into the unorganised sector — a segment where it has no presence and where retirement benefits are given only under the National Pension System (NPS).
The labour ministry has proposed that provident fund, pension and insurance benefits, currently being accorded to a section of organised-sector workers, be extended to the entire working population under a comprehensive social security net. India has an around 49-crore working population.
While an employee contributes 12% of the basic pay to EPF, the employer contributes 8.33% towards employees’ pension scheme and 3.67% to the EPF itself. Additionally, employers also pay 0.5% towards EDLI, 0.65% as EPF administrative handling fee, taking the total contribution to 13.15%.
Though the threshold exists for mandatory cover, employers and workers can opt for the scheme even if the salary levels are higher.
The EPFO’s wage threshold was last raised in November 2014 from Rs 6,500 a month. The wage threshold for medical/cash and insurance benefits under the Employees’ State Insurance Corporation (ESIC) was raised last year to Rs 21,000 per month, from Rs 15,000 previously.
The EPFO had earlier written to the labour ministry requesting it to raise the EPF wage limit to Rs 25,000, given the recent hike in the minimum wages by the Centre for workers in 45 scheduled employment categories.
Sources said the proposal to raise the EPF limit could face some resistance from employers’ representatives, as many believe that this would be a great pain, particularly for small-scale industries; but employees’ representatives are gung-ho as it would bring more employees under the social security net.
As reported by FE earlier, the EPFO is also planning to make inroads into the unorganised sector — a segment where it has no presence and where retirement benefits are given only under the National Pension System (NPS).
The labour ministry has proposed that provident fund, pension and insurance benefits, currently being accorded to a section of organised-sector workers, be extended to the entire working population under a comprehensive social security net. India has an around 49-crore working population.
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