Union Cabinet approves hike in EPFO wage ceiling to Rs 25,000

New Delhi: The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved an increase in the wage ceiling for mandatory coverage under the Employees’ Provident Fund Organisation (EPFO) from Rs 15,000 to Rs 25,000 per month, a move expected to bring more than 51 lakh additional employees under the social security framework.

The proposal, put forward by the Ministry of Labour and Employment, will extend mandatory provident fund coverage to a large section of employees earning between Rs 15,000 and Rs 25,000 per month.

At present, a new employee joining an establishment with a monthly wage above Rs 15,000 is not automatically covered under the Employees’ Provident Fund (EPF) framework and may remain outside mandatory provident fund, pension and associated insurance protection.

With the wage ceiling raised to Rs 25,000, more employees will become eligible for provident fund savings, pension benefits under the Employees’ Pension Scheme (EPS) and insurance protection under the Employees’ Deposit Linked Insurance Scheme (EDLI), subject to the applicable provisions of the schemes.

The EPFO wage ceiling had remained unchanged between 2004 and 2014 before being increased to Rs 15,000 per month in September 2014. The latest revision comes after 12 years and is aimed at aligning the statutory social security framework with rising wages, higher incomes and the expansion of formal employment.

According to the government, minimum wages in several states and occupations have also moved closer to the existing Rs 15,000 threshold, increasing the need to revise the ceiling.

The proposal underwent inter-ministerial consultations and was recommended by the Expenditure Finance Committee at its meeting on June 16, 2026.

The revision is estimated to result in an annual government outgo of about Rs 11,339 crore, compared with the existing annual budgetary support of around Rs 10,250 crore. The estimated expenditure over five years is approximately Rs 56,696 crore.

The government expects the measure to support the formalisation of employment while strengthening retirement and social security protection for workers. Wider EPFO coverage is also expected to contribute to employee retention and workforce stability.

EPFO administers three major social security schemes — the Employees’ Provident Fund, Employees’ Pension Scheme and Employees’ Deposit Linked Insurance Scheme. According to the latest EPFO data, it has around 7.98 crore contributing members across approximately 7.68 lakh contributing establishments, while EPS provides pension benefits to around 82 lakh pensioners.

The Ministry of Labour and Employment and EPFO will undertake the necessary statutory and administrative steps to implement the Cabinet decision. DeshGujarat