NEW DELHI: In a move that could significantly enhance the coverage of Employees Provident Fund Organisation, a proposal to increase monthly wage ceiling beyond the current Rs 15,000 is back on the table amid suggestions that it should be raised to Rs 25,000-30,000 a month.The wage ceiling refers to the salary threshold up to which it is mandatory for a worker in an establishment covered under EPFO to make monthly contributions.Govt had earlier discussed a proposal to increase the threshold to Rs 25,000 – but it was put on the backburner due to reluctance of employers, who wanted the limit to be retained, with some suggesting that a higher cap should come with lower contribution. Some of the employee unions, however, had demanded a Rs 30,000 cut-off.The current ceiling was fixed over a decade ago, in Sept 2014, making it optional for anyone earning over Rs 15,000 to be part of EPFO. Since then, salaries have gone up significantly, and minimum monthly wages in many states even for unskilled workers are now above this threshold. This leaves many low wage or minimum wage earners outside the ambit of the social security organisation. Earlier this week, Supreme Court asked the labour ministry to review the cap within four months. The move will widen EPFO’s subscriber base and bring more workers, especially in the unorganised sector, under the ambit of the retirement fund body. It comes at a time when the new labour codes have been notified, being likely to be implemented in the next few months with a clear focus to ensure that an employee’s wages add up to at least 50% of the total remuneration, with the remaining being allowances.Officials said by clearly defining wages, the labour codes would reduce disputes over eligibility. They also said at the current cap, the bulk of contributions amount to around Rs 15,000 and increase will push up the level, helping workers have a larger pool of money at their disposal when they retire, especially with the role of compounding playing out. Recently, EPFO had mandated a minimum 25% balance in a subscriber’s corpus while easing rules for withdrawal. Data available till FY24 has pegged the number of active contributing members under EPFO at nearly 7.4 crore, while nearly 32 crore member acco-unts exist under the retirement fund body, which include a mix of active and past contributors.
