What does the latest revision to the EPFO wage ceiling entail? | Explained

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The Union Government said the decision is expected to bring more than 51 lakh additional employees within the ambit of mandatory EPFO coverage. File image. | Photo Credit: The Hindu

The story so far: The Union Cabinet, which met in New Delhi on Wednesday (September 16, 2026), approved a long-pending demand for raising the wage ceiling for mandatory coverage under the Employees’ Provident Fund Organisation (EPFO) to ₹25,000 a month from ₹15,000. The Union Labour Ministry had made the proposal to increase the wage ceiling. The last time the ceiling was increased was in September 2014. The employers’ organisations, largely, welcomed the announcement and sought the Union Government’s help to implement the decision as the employers’ share to the Provident Fund will increase. The trade unions described the increase as “too little and too late” .

The Government said in a release that the decision reflects the sustained wage growth, rising incomes and a continued expansion of formal employment over the years. On Thursday (September 17, 2026) the Union Labour Ministry published an official gazette notification maintaining that the decision was taken based on Clause (89) of Section 2 of the Code on Social Security.

The Union Government said the decision is expected to bring more than 51 lakh additional employees within the ambit of mandatory EPFO coverage, significantly widening social security protection for workers. Union Labour Minister Mansukh Mandaviya told reporters that about one crore subscribers could be added to the ambit of the EPFO by the decision.

He said the average salary in private establishments has increased up to ₹ 23,000 as per Government survey and increasing the ceiling is a decision based on that. Other than the access to the retirement fund savings, which has a higher interest rate compared to other small saving schemes, the new decision will also help a number of workers to access pension protection under the Employees’ Pension Scheme (EPS) and insurance protection under the Employees’ Deposit Linked Insurance Scheme (EDLI).

The Government will spend about ₹11,339 crore towards its contribution to the EPS, against the existing annual budgetary support of about ₹10,250 crore. The Government maintained that the measure is expected to give a further impetus to formalisation of employment, worker retention and long-term retirement security. “By bringing a larger number of employees automatically within the statutory social security framework, the decision strengthens the principle that formal employment should be accompanied by portable and assured social security protection,” it added.

The contributions of the employees and employers towards the Provident Fund and to the Employees Pension Scheme will also increase as per the new wage ceiling.