look news india
Good news for EPFO employees: According to the Employees' Provident Fund Organisation, the Ministry of Labour and Employment has proposed to the Union Finance Ministry to consider increasing the wage limit for calculating Employees' Provident Fund from Rs 15,000 to Rs 21,000.
The Centre has fixed the maximum salary limit for provident fund deduction for employees under the Employees' Provident Fund Organisation (EPFO) at Rs 15,000 from September 1, 2014. Earlier, the salary limit for employee contribution under EPFO was Rs 6,500.
Sources said the labour ministry finalised the proposal after considering various recommendations and a meeting of the Central Board of Trustees (CBT) of the Employees' Pension Scheme (EPS) in April. The CBT is a statutory body constituted by the central government. However, the proposal was sent to the finance ministry in July after the Lok Sabha elections were over and a new government was formed at the Centre.
If the Labour Ministry's proposal is approved, it will impact the contributions made to the Employees' Pension Scheme, which will ultimately affect the pension amount received by the employee at the time of retirement!
Currently, the Employees' Pension Scheme contribution is calculated on a basic salary of Rs 15,000 per month, thereby limiting the maximum contribution to Rs 1,250 per month! If the government increases the salary limit to Rs 21,000, this contribution will increase to Rs 1,749 (8.33% of Rs 21,000)!
The increase in the wage limit under the EPF scheme will also increase the pension amount at the time of retirement! As per the Employees' Pension (Amendment) Scheme, 2014, the formula for calculating the Employees' Pension Scheme pension is as follows:
Pensionable service refers to the period during which an employee has actively contributed to EPF and EPS accounts.
The formula for calculating the Employees' Provident Fund Organisation (EPFO) pension was revised by the EPFO in 2014. Prior to this revision, the pensionable pay was determined by the average basic pay of a person's last year of service.
