New Delhi, Sept 2026 : The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved a proposal to raise the wage ceiling for mandatory coverage under the Employees’ Provident Fund Organisation (EPFO) from Rs 15,000 to Rs 25,000 per month. The move is expected to bring more than 51 lakh additional employees under the statutory social security framework.
Under the existing system, employees entering a job with wages exceeding Rs 15,000 per month are not automatically covered under the mandatory EPF framework. Such workers may consequently remain outside compulsory provident fund, pension and associated insurance protection. The revised ceiling will bring employees earning between Rs 15,000 and Rs 25,000 per month within the mandatory coverage framework, according to the Cabinet communique.
The decision will expand access to retirement savings under the Employees’ Provident Fund (EPF), pension benefits under the Employees’ Pension Scheme (EPS) and insurance protection under the Employees’ Deposit Linked Insurance Scheme (EDLI), subject to the applicable provisions of these schemes.
The government said the revision would also help align the statutory contribution and pensionable-wage framework more closely with prevailing wage levels, particularly as incomes and formal employment have expanded over the years.
The proposal was examined through detailed inter-ministerial consultations and received the recommendation of the Expenditure Finance Committee at its meeting on June 16. The annual financial implication for the government is estimated at Rs 11,339 crore, compared with existing annual budgetary support of around Rs 10,250 crore.
Over a five-year period, the estimated government expenditure on account of the decision is approximately Rs 56,696 crore, the statement said.
The EPFO wage ceiling had remained unchanged for a decade between 2004 and 2014. It was subsequently increased to Rs 15,000 per month in September 2014. The latest decision further raises the threshold to Rs 25,000, with the government stating that the revision takes into account sustained wage growth, rising incomes and the expansion of formal employment during the intervening period.
The government expects the measure to contribute to the formalisation of employment and strengthen long-term retirement security for workers. With more employees automatically entering the statutory social security system, the expanded coverage is intended to ensure that formal employment is accompanied by access to established provident fund, pension and insurance mechanisms.
The decision could also have implications for employers and workforce stability. Wider access to social security benefits can provide employees with greater financial security and retirement protection, while employers may benefit from improved workforce retention and continuity, according to the government.
The EPFO administers three major social security schemes — the Employees’ Provident Fund, the Employees’ Pension Scheme and the Employees’ Deposit Linked Insurance Scheme — making it one of the largest social security organisations in the world.
According to the latest EPFO data cited by the government, the organisation has around 7.98 crore contributing members across approximately 7.68 lakh contributing establishments. The Employees’ Pension Scheme provides pension benefits to around 82 lakh pensioners, while EDLI provides insurance protection linked to EPF membership.
The government said the decision comes at a time when India’s workforce remains central to economic growth, with rising wages, improving incomes and increasing formal employment creating new opportunities for workers.
By raising the mandatory coverage threshold, the government intends to ensure that the social security framework keeps pace with these changes and extends statutory protection to a larger section of formal-sector employees.
The Cabinet approval, the statement said, represents a further step towards expanding social security coverage and strengthening the country’s social protection architecture alongside economic growth, rising wages and the continued formalisation of employment.
