If you contribute a portion of your salary to PF, there's important news for you. A major change has been made for employees covered by the Employees' Provident Fund Organization (EPFO). The central government has raised the salary limit for mandatory coverage under the EPFO ​​from ₹15,000 to ₹25,000 per month. Employees earning between ₹15,000 and ₹25,000 per month will now benefit from the EPFO's social security system.

According to government estimates, this decision could bring over 5.1 million more employees
across the country under mandatory EPFO ​​coverage for the first time. These employees are expected to benefit from EPF savings, the Employee Pension Scheme (EPS), and insurance cover under EDLI.

What will change for a salary of Rs 25,000?
Previously, new employees with salaries above Rs 15,000 in the EPFO ​​were not automatically eligible for EPF coverage. Now, eligible employees in the salary bracket of Rs 15,000 to Rs 25,000 will receive the required coverage. This will allow the relevant employees to start making PF contributions from their salaries.

This could impact their take-home pay, as their PF contributions will be reduced. However, they will continue to receive social security benefits such as savings, pensions, and retirement insurance cover.

Pension Changes
The new salary limit also increases the maximum salary eligible for pension under the EPS. According to the EPFO, the maximum employer contribution will increase from ₹1,250 to approximately ₹2,083 per month, which translates to 8.33%.

Meanwhile, according to the government, this decision will help more employees access long-term social security. Therefore, it's important for salaried employees to check the impact of PF deductions and employer contributions on their salary structure.

PC: BUSINESS TODAY