If you’re an employee, this news holds great significance for you. Over 6.5 crore subscribers of EPFO are set to benefit from a potential decision to raise the ceiling on the pension fund.
The government aims to expand the coverage of the PF scheme, and one way to achieve this is by increasing the pension limit from the current Rs.15,000 to Rs.21,000.
Currently, as per EPFO regulations, the maximum basic salary eligible for the EPS pension is Rs.15,000.
This means that a maximum of Rs.1,250 can be deposited into the EPFO pension fund each month. If changes are implemented, this limit could be raised to Rs.21,000.
Understanding the Basic Salary Limit
When an EPFO subscriber contributes to the Employees’ Pension Scheme (EPS), the entire amount, along with the Employee Provident Fund (EPF) contributions, is sent to the EPFO.
These contributions are made by the employer. However, there is a current cap of Rs.15,000 on the deposit and pension fund. EPFO intends to revise this limit.
For instance, if an EPFO subscriber has a basic salary of Rs.30,000, a 12% contribution is made by both the employee and employer to the EPFO.
However, the employer’s share is divided between the EPF and EPS accounts. Currently, due to the EPFO limit, only 8.33% of the salary (Rs.1,250) is deposited into the EPF.
If the limit is increased, this portion can be raised to Rs.2,083, which will be deposited into the pension fund.
Potential Benefits for EPFO Subscribers
EPFO official Bhanu Pratap Sharma stated that if the decision to increase the pension limit is approved, it will greatly benefit the 6.5 crore EPFO subscribers.
This move will extend the scheme’s coverage to more individuals, and an increase in the employer’s share will result in a larger pension fund. However, the implementation of this rule may take some time.
Sources reveal that the members of the Central Board of Trustees are discussing an increase in the pension fund limit, with a proposal to set the basic salary limit at around Rs.18,000.
Such an adjustment would bring greater benefits to employees by expanding the current salary structure.
