Finance Ministry Approves EPF Wage Ceiling Hike To ₹25,000 Per Month

The Finance Ministry has approved raising the wage ceiling for mandatory retirement fund coverage to ₹25,000 a month, up from the ₹15,000 limit that has remained unchanged for over a decade, according to a report by Moneycontrol.

At present, employees earning up to ₹15,000 a month in basic pay are mandatorily covered under the Employees' Provident Fund (EPF) and Employees' Pension Scheme (EPS) framework. Those earning above this threshold can opt out, and employers face no legal obligation to enrol them.

Once the new ceiling takes effect, employees earning between ₹15,000 and ₹25,000 a month in basic pay will also come under mandatory coverage. This is expected to expand social security coverage for private sector workers, the report said.

The Finance Ministry had also examined a higher cut-off of ₹30,000 before settling on ₹25,000, an official told Moneycontrol.

Next Steps

The proposal will now be placed before the Cabinet for approval. The exact date from which the revised ceiling will take effect will be decided after this approval, the report said.

Although the proposal is moving forward, implementation is unlikely to happen immediately after Cabinet clearance. Businesses will need time to modify their payroll systems and compliance processes, and some transition period may be provided before the new threshold comes into effect.

As things stand, the revised EPF wage ceiling could be implemented from April 1, 2027, though the final date will depend on Cabinet approval and the time businesses need to prepare, the report added.

For employers, the change means a larger share of their workforce will fall under mandatory contributions, adding to payroll costs.

The change is also expected to increase the government's financial commitment. Employers contribute 8.33% of basic pay and the government contributes 1.16% of basic pay toward the pension fund. The Employees' Pension Scheme received a budget outlay of ₹11,144 crore for 2026-27, the report said.

Mandatory EPF and EPS coverage currently applies only to establishments with 20 or more employees. Smaller firms can register voluntarily but are not obligated to do so.

The change is also confined largely to the organised private sector. Central government employees are covered under separate pension arrangements and fall outside the EPS framework.

The wage ceiling was last revised in September 2014, when it was raised to ₹15,000, the report added.