A major change is underway in the Employees' Provident Fund Organization (EPFO) rules, directly affecting the pockets and futures of millions of working people. The central government is preparing to raise the mandatory salary threshold for PF contributions from the current ₹15,000 to ₹25,000 per month. This move aims to bring more workers within the social security net. If implemented, this proposal would be the biggest change to PF rules in several years.

Reason behind increasing the limit

According to current rules, employees earning a basic salary of ₹15,000 or less are required to be a part of the PF. Employees earning salaries above this limit can opt out or opt out at will. The government believes the current threshold is too low and deprives a large number of workers of social security benefits. Following Supreme Court directives, the government is now seriously considering rationalizing this threshold and increasing it to benefit more people.

When can the new rules come into effect?

According to sources, the new PF salary limit could become effective from April 2026. This proposal is expected to be discussed at the upcoming meeting of the EPFO's Central Board of Trustees. If approved by the board, this decision would mark a historic turning point in the country's labor structure. Once implemented, millions of new employees in both the private and organized sectors will be directly connected to the PF scheme.

Impact on the lives of employees

This change will have the greatest impact on those earning between ₹15,000 and ₹25,000. Until now, these employees were outside the scope of mandatory PF contributions, but with the new rule, they will be required to join the scheme. This will certainly result in a slight reduction in their monthly "in-hand" (take-home) salary, as a portion of their salary will be deducted as PF contributions. However, the flip side of this is very positive. In the long run, their retirement funds will increase significantly, and their interest earnings will also increase.

The benefits of change

The biggest benefit of this decision is that millions of additional workers will receive social security benefits like pensions and PF, ensuring their old age. The increase in the total PF corpus will also strengthen the economy. On the other hand, the challenge is that employees will experience a reduction in their immediate cash pay, which could impact their monthly budget planning. Furthermore, the financial burden on employers will also increase, as they will be required to contribute more to their employees' PF.

Experts' View

Financial experts believe this step is crucial for future security. While employees may experience some discomfort due to lower salaries in the first few months, the larger retirement amount and lifelong pension security will more than make up for this shortcoming. This is being considered a commendable effort by the government to ensure long-term financial stability. Overall, this proposal will not only encourage employees' savings but also provide them with a solid financial foundation.

Disclaimer: Any change in EPFO rules or salary limit is subject to official government notification. News Crab advises readers to consult the official government website or relevant experts before taking any financial decisions.