New Delhi, September 16 : The Union Cabinet on Wednesday approved a proposal to enhance the wage ceiling for mandatory coverage under the Employees’ Provident Fund Organisation (EPFO) from Rs 15,000 to Rs 25,000 per month, a move expected to bring more than 51 lakh additional employees under mandatory social security coverage.
The decision, taken at a Cabinet meeting chaired by Prime Minister Narendra Modi, is aimed at widening social security protection for workers and strengthening the formalisation of employment.
The EPFO wage ceiling had remained unchanged throughout the decade from 2004 to 2014 before being enhanced to Rs 15,000 in September 2014. The latest revision seeks to align the ceiling with sustained wage growth, rising incomes and the expansion of formal employment.
At present, a fresh employee joining employment at a wage above Rs 15,000 per month is not automatically covered under the EPF framework and may remain outside mandatory provident fund, pension and associated insurance protection.
With the ceiling raised to Rs 25,000, employees in the Rs 15,000-Rs 25,000 wage band will be brought within the statutory social security framework, subject to applicable provisions.
The expanded coverage will provide access to provident fund savings, pension protection under the Employees’ Pension Scheme (EPS) and insurance protection under the Employees’ Deposit Linked Insurance Scheme (EDLI), in accordance with the applicable scheme provisions.
The government said the move will also enable the statutory contribution and pensionable-wage framework to better reflect prevailing wage levels.
Since the last revision in September 2014, India has witnessed sustained wage growth, rising incomes and continued expansion of formal employment. In several states and occupations, minimum wages have also moved closer to the existing threshold.
The enhancement is expected to provide further impetus to employment formalisation, worker retention and long-term retirement security. Wider social security coverage is also expected to support employee retention, workforce stability and morale among employees.
The proposal underwent detailed inter-ministerial consultations and was recommended by the Expenditure Finance Committee at its meeting held on June 16, 2026.
The annual government outgo under the measure is estimated at about Rs 11,339 crore, against the existing annual budgetary support of around Rs 10,250 crore. The estimated expenditure over five years is approximately Rs 56,696 crore.
EPFO operates one of the world’s largest social security systems, administering the Employees’ Provident Fund (EPF), Employees’ Pension Scheme (EPS) and Employees’ Deposit Linked Insurance Scheme (EDLI).
According to the latest EPFO data, the organisation has around 7.98 crore contributing members across about 7.68 lakh contributing establishments, while the EPS provides pension benefits to around 82 lakh pensioners. EDLI provides insurance protection linked to EPF membership.
The government said the measure will ensure that the social security framework keeps pace with rising wages and expanding formal employment, enabling a larger number of workers to receive statutory social security protection.
It said the decision marks another step towards building an inclusive, resilient and future-ready social security architecture as India moves towards Viksit Bharat@2047.
The Ministry of Labour and Employment and EPFO will undertake the necessary statutory and administrative steps for implementation of the decision.(KNS)
