The central government is planning a significant change to the Provident Fund rules, potentially benefiting government employees across the country with an increased wage limit.
The central government is introducing significant changes to the Employee Provident Fund rules to enhance social security for employees in private organizations.
Current EPFO Regulations
Currently, EPFO regulations mandate compulsory pension scheme coverage for private-sector employees with a basic salary up to Rs 15,000
New Provident Fund Rules
The central government plans to increase the minimum wage for PF from 15,000 to 21,000 rupees.
While no official announcement has been made, sources suggest the Ministry of Labor may soon implement the new rules.
12% of a private-sector employee's basic salary is deducted for the Provident Fund, matched by their employer.
What are the two components of Provident Fund?
The EPFO fund has two parts: Employee Provident Fund (EPF) and Employee Pension Scheme (EPS).
Employer's Contribution to PF
8.33% of the employer's contribution goes to the pension account, while the remaining 3.67% goes to the Provident Fund.
A maximum of 1,250 rupees can be deposited monthly into an employee's EPS account, accessible only after retirement. Employees can withdraw a certain amount from their Provident Fund as needed or receive it after retirement.
Raising the wage limit to 21,000 rupees aims to bring more private-sector employees under the pension scheme. The pension fund contribution is expected to increase from 1,250 to 1,749 rupees with the wage limit increase. While the government pays interest on PF savings, no interest is given on EPS deposits.
subscribe to Asianet Newsable WhatsApp channel by clicking here. For more reliable and latest news
subscribe to Asianet Newsable Telegram channel by clicking here.