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EPFO Wage Ceiling Hike Could Raise EPS Pension
The government has approved a higher salary limit for joining EPFO, increasing it from Rs 15,000 to Rs 25,000 per month.
This could allow more workers to receive benefits under the Employees' Pension Scheme, or EPS.
The pension amount depends on a worker's pensionable salary and eligible years of service.
The basic formula multiplies salary by service years and divides the result by 70.
Workers with at least 20 years of eligible service may receive an additional two years in the calculation.
For example, 30 years of service could be counted as 32 years.
Using a Rs 25,000 salary, this example gives an estimated pension of Rs 11,429 a month.
These figures are only illustrations, and the higher limit does not guarantee an increase for people already receiving pensions.
The Cabinet approved raising the mandatory EPFO wage ceiling from Rs 15,000 to Rs 25,000 a month.
The change is expected to bring more than 51 lakh additional employees under mandatory EPFO coverage.
EPS pension is calculated using pensionable salary multiplied by pensionable service, divided by 70.
Illustratively, 30 years of eligible service could produce a monthly pension of Rs 11,429 under the Rs 25,000 ceiling, compared with Rs 6,857 under the Rs 15,000 ceiling.
The higher ceiling will not automatically increase pensions for every existing EPS pensioner; actual benefits depend on eligibility, salary history, service and implementation rules.
- Who
- The government, EPFO members and employees who may become eligible for EPFO and EPS coverage.
- What
- The mandatory EPFO wage ceiling has been approved for increase from Rs 15,000 to Rs 25,000 a month.
- Where
- When
- The article does not specify the date of the approval.
- Why
- To expand formal social-security coverage and make the pensionable-wage framework better reflect current salary levels.
Key facts
- Existing wage ceiling
- Rs 15,000 per month
- Revised wage ceiling
- Rs 25,000 per month
- Expected additional coverage
- More than 51 lakh employees
- EPS formula
- Monthly pension = pensionable salary × pensionable service ÷ 70
- 30-year service example
- 32 years may be counted after the two-year service bonus
- Illustrative pension at Rs 15,000
- Rs 6,857 per month for 30 years of eligible service
- Illustrative pension at Rs 25,000
- Rs 11,429 per month for 30 years of eligible service
Sources
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