Employees’ Provident Fund Organisation (EPFO), the retirement fund body, is thinking of hiking the existing salary cap for pension from Rs 15000 to Rs 21000.
Via the last amendment that happened about eight years ago, the cap was revised from Rs 6,500 to Rs 15,000.
While more people will benefit from pensions — about 75 lakh employees — post implementation of this increase in cap, the pressure on the Government’s finances will also go up. The Government is yet to lend an official approval to this proposal, which will translate into an expenditure of about Rs 6,750 crores.
The EPF scheme is mandatory for all employees who earn a salary of Rs 15,000 or less. The Government contributes 1.6 per cent of the basic salary to the PF account of the employees.
As of now, it is mandatory for all companies with over 20 members in their workforce to register with EPFO.
At the beginning of this year, about 1.52 million subscribers were added to EPFO, compared to 1.26 million last year.
The high-level ad hoc committee that has given its approval to the hike in cap, suggests that the Government may implement this later, after giving the same serious thought.
Since the EPFO extends social security to its subscribers via pension and insurance funds as per the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952, the increase in the limit to Rs 21,000 will make more workers its beneficiaries.