Raising the wage ceiling limit of the employees of the Employees’ Provident Fund Organization (EPFO) has been considered by the government. This means that the minimum salary level of those who hold PF accounts may be raised from Rs 15,000 to Rs 21,000 now.
This would push the salaried employee’s PF contribution, and at the same time, he would also be entitled to a greater pension at retirement, since it would involve higher contributions both by the employer and the employees. The intention of the government behind all this is to expand the social security coverage of employees.
Pension will be increased after retirement!
The employees contribute 12 percent of the basic salary toward EPF usually. The employer’s contributes 12 percent also, based on the basic salary of the employee. Out of this 12 percent, 8.33 percent is deposited in the EPS account. Presently, on the wage ceiling limit of Rs 15,000, 8.33 percent of it is in the employee’s pension account, i.e., EPS.
If the wage ceiling limit increases to Rs 21,000, then now 8.33 percent of this amount will be deposited in EPS. This means an increase in the pension amount after retirement. Till now, where 8.33 percent of Rupees 15,000, that is, Rs 1,250 was deposited in EPS, now with the wage ceiling limit increased to Rs 21,000, 8.33 percent of this amount i.e. Rs 1,749, will be deposited under the pension account.
Amendment was done ten years ago
This would give a floodgate to the lump sum withdrawal of EPF on retirement, while also increasing the amount of pension through EPS. The last wage ceiling was raised by the government 10 years ago in 2014. At that time, it was increased from Rs 6,500 to Rs 15,000. Just because the income of people has risen, along with the inflation, the government should go ahead with reconsidering it again. For long, this issue has been kept in demand.
