- By Aditya Pratap Singh
- Wed, 16 Sep 2026 04:18 PM (IST)
- Source:JND
- Union Cabinet approves significant hike in EPFO wage ceiling.
- Mandatory wage limit increased from Rs 15,000 to Rs 25,000.
- Expands social security net for 51 lakh formal employees.
In a move that could bring relief to more than 51 lakh additional employees working in the formal sector, the Union Cabinet approved hiking the mandatory wage ceiling for coverage under the Employees’ Provident Fund Organisation to Rs 25,000 from the current Rs 15,000, considering the request from the Ministry of Labour & Employment’s proposal to increase the wage ceiling.
As per the Ministry of Labour and Employment, the move will expand the social security net for workers.
“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,” the Ministry said in a press release.
How Will The EPFO Wage Ceiling Hike Impact 51 Lakh Employees?
Exclusion under previous ceiling: Under the current circumstances, employees earning above Rs 15,000 per month are not automatically covered under the EPF framework, excluding them from mandatory provident fund, pension, and insurance protection.
Coverage expansion: Raising the wage ceiling to Rs 25,000 brings approximately 51 lakh employees who earn between the Rs 15,000–Rs 25,000 wage band under the statutory social security net.
Broader benefit access: Eligible employees will now have access to savings benefits under the provident fund, pension protection under EPS, and insurance coverage under EDLI.
Why Has The Government Increased The EPFO Wage Ceiling?
The ministry believes that the new development strengthens retention of employees and will formalise long-term retirement security. The hiked wage ceiling limit will automatically bring a larger number of employees within the statutory social security framework and strengthen the principle that formal employment should be accompanied by portable and assured social security protection.
“For employers as well, wider social security coverage can support employee retention, workforce stability, morale and the development of a more secure and future-ready workforce,” the Ministry noted.
What Govt Spend On EPFO
The proposal underwent detailed inter-ministerial consultations before getting the cabinet approval and was recommended by the Expenditure Finance Committee in its meeting held on 16 June 2026.
-The annual government outgo is estimated at Rs 11,339 crore, compared to the existing annual budgetary support of about Rs 10,250 crore.
-The estimated expenditure over five years is approximately Rs 56,696 crore.
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Wage Ceiling Remains Unchanged From 2014
The EPFO wage ceiling remained unchanged for a decade from 2004 before it was increased to Rs 15,000 in 2014. The government's move to hike the wage ceiling to Rs 25,000 reflects sustained wage growth across the nation, the ministry noted.
EPFO Operates World's Largest Social Security System
EPFO manages EPF, EPS, and EDLI, operating one of the largest social security systems globally.
The social security scheme covers approximately 7.98 crore contributing members across 7.68 lakh establishments.
EPS provides benefits to around 82 lakh pensioners, alongside insurance coverage via EDLI.