New Delhi: Retirement fund body Employees' Provident Fund Organisation (EPFO) is looking to raise the existing salary limit for pension from Rs 15000 to Rs 21000.
The idea to increase the wage ceiling has been backed by a high-level committee, according to a report in the Economic Times. However, the government's approval will remain critical. The government will have to make additional provision which will cost Rs 6,750 crore, as per the report.
The government contributes 1.16 per cent of the basic salary. The move to raise the salary limit is expected to benefit 75 lakh employees, according to the report. In 2014, the EPFO limit was last raised to Rs 15,000.
The committee is of the view that the government can implement the increase from a later date considering all inputs. The proposal, once approved by the central board of the trustees of EPFO, will offer relief to the employers who are reluctant to immediately take on any additional financial burden.
During consultations, employers have raised concerns on their balance sheets due to the outbreak of the pandemic and sought more time for implementing the proposed increase.
How will the proposed hike in wages help employees?
As of now any company with more than 20 employees must register with the EPFO and the EPF scheme is compulsory for all employees earning less than Rs 15,000. The increase in the limit to Rs 21,000 will bring more workers under the fold of the retirement scheme.
The government contributes 1.16 per cent of the total basic wage of EPFO subscribers towards the scheme.
Apart from this, the proposal will also align the ceiling with the other social security scheme Employees' State Insurance Corporation (ESIC) where the limit is Rs 21,000.
However, labour unions are wary about the timeline of the proposal being implementation as it may get delayed in approvals.