EPFO Wage Limit: It seems that the long-pending demand of increasing the EPFO wage limit for subscribers will soon be met by the central government, which last revised the wage ceiling to decide the employees’ monthly contribution towards provident fund and pension scheme run by the Employees’ Provident Fund Organisation in September 2014.
According to an ET report, the Centre is considering increasing the EPFO wage ceiling from Rs 15,000 to Rs 21,000. However, various employee unions have ben demanding the limit be raised to Rs 25,000.
The Employees’ Pension Scheme (EPS) is managed by the EPFO. The Modi government had raised the wage ceiling from Rs 6,500 to Rs 15,000 for calculating the EPS pension after coming to power at the Centre in 2024. However, the proposed increase could provide much-needed relief and enhanced benefits to employees.
Earlier in August, FE Online learnt from sources that the Labour Ministry sent a proposal to the Finance Ministry to raise the wage limit for PF and EPS contribution to Rs 21,000 from the current Rs 15,000.
Also read: EPFO’s Centralised Pension System: EPS members can withdraw pension anywhere; no PPO transfer needed – Details inside
How will this EPFO wage ceiling hike impact your pension and PF corpus at retirement?
If the government decides to implement the proposal to increase the wage limit under EPFO, it will have a significant impact on your provident fund corpus and pension upon retirement.
Here we will understand from calculations based on Rs 15000 wage ceiling and proposed Rs 21,000 limit and see how much difference is there in the PF retirement corpus and monthly pension under the EPS after a member retires from the service at the age of 58 years.
Formula: EPS Pension = (Average Salary x Pensionable Service) / 70
Average salary: Basic salary + dearness allowance (DA)
Maximum pensionable salary: Currently Rs 15,000
Maximum Pensionable Service: 35 years
With the current wage ceiling of Rs 15,000, the maximum EPS pension is calculated as:
EPS Pension = Rs 15,000 x 35 / 70 = Rs 7,500 per month
Proposed wage ceiling increase:
If the wage ceiling is increased to Rs 21,000, the new pension calculation would be:
EPS pension = Rs 21,000 x 35 / 70 = Rs 10,050 per month
This indicates an increase of Rs 2,550 per month in the EPS pension,
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