The Finance Ministry has received a proposal from the Labour Ministry to increase the EPF wage limit from ₹15,000 to ₹21,000. If approved, this change will bring significant benefits to employees, including higher pensions and larger retirement savings.
How This Change Benefits Employees
- Higher Pension Contributions:
Currently, the pension contribution under the Employee Pension Scheme (EPS) is calculated at 3.67% of the wage limit, which is ₹15,000. Here’s how it works:- 3.67% of ₹15,000 = ₹5503.67% of ₹21,000 = ₹770
- Increased EPF Amount at Retirement:
Higher wages mean more contributions to the EPF account. Both the employee’s and employer’s share will increase, leading to a larger corpus by the time of retirement. - Higher Monthly Pension:
Currently, the maximum monthly pension under EPS is ₹7,500. With the wage limit increase, the maximum pension could go up to ₹10,050—a rise of ₹2,550 per month.
Comparison of Current and Proposed Benefits
| Details | Current Limit (₹15,000) | Proposed Limit (₹21,000) | Increase |
| EPS Contribution (3.67%) | ₹550 | ₹770 | ₹220 |
| Maximum Monthly Pension | ₹7,500 | ₹10,050 | ₹2,550 |
History of EPF Wage Limit Changes
The last time in 2014, the EPF wage limit increased to 15,000 Rs from 6,500 Rs. Since then it has been almost 10 years, and there has been no hike in the EPF wage limit, hope this time the finance ministry will raise the EPF wage limit.
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What to Expect
The government may announce this decision in the upcoming Union Budget on February 1, 2025. If implemented, this change will provide much-needed financial security to employees, ensuring they have better pensions and retirement savings.