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The Union Cabinet approved raising the wage ceiling for mandatory EPFO coverage from Rs 15,000 to Rs 25,000 a month, on a proposal of the Ministry of Labour & Employment.
More than 51 lakh additional employees are expected to come within mandatory provident fund, pension and insurance cover.
The revision takes effect on 17 September 2026; the ceiling had last been raised in September 2014 and stayed unchanged through 2004-2014.
Annual government outgo is estimated at about Rs 11,339 crore against existing budgetary support of about Rs 10,250 crore, or roughly Rs 56,696 crore over five years.
Build a lump-sum retirement corpus from monthly contributions by employee and employer.
Key: Employee and employer each contribute 12% of wages; of the employer's share, 3.67% goes to the provident fund.
Provide a lifelong monthly pension on retirement, and to dependants on death or permanent disability.
Key: Framed under Section 6A of the parent Act and funded by diverting 8.33% of the employer's 12% contribution.
Give life insurance cover linked automatically to EPF membership, at no cost to the employee.
Key: Employer contributes 0.5% of wages; the assurance benefit ranges from Rs 2.5 lakh to a maximum of Rs 7 lakh.
Established in 1952, it administers the EPF, EPS and EDLI schemes and runs one of the world's largest social security systems.
EPFO's apex decision-making body, a statutory tripartite board with Central and State Government, employer and employee representatives.
The other statutory social security body under the same ministry, providing medical care and cash benefits under the ESI Act, 1948.
Appraises central scheme proposals costing above Rs 500 crore before they go to the Cabinet; it cleared this proposal on 16 June 2026.
The parent Act under which all three EPFO schemes are framed. It applies to establishments employing 20 or more persons, with smaller establishments able to join voluntarily.
Governs the parallel ESI stream of medical and cash benefits; the ESI Corporation itself was established on 24 February 1952.
Passed by Parliament on 23 September 2020 and given presidential assent on 28 September 2020, it consolidates existing social security laws including the 1952 Act. It is one of the four labour codes.
| Aspect | EPFO | ESIC |
|---|---|---|
| Governing law | Employees' Provident Funds and Miscellaneous Provisions Act, 1952 | Employees' State Insurance Act, 1948 |
| Core benefit | Provident fund, pension and deposit-linked insurance | Medical care and cash benefits during sickness, maternity and employment injury |
| Wage ceiling for coverage | Rs 25,000 per month from 17 September 2026 (earlier Rs 15,000) | Rs 21,000 per month, raised to Rs 25,000 for persons with disability |
| Apex body | Central Board of Trustees, EPF | Employees' State Insurance Corporation |
| Parent ministry | Ministry of Labour & Employment | Ministry of Labour & Employment |
The Code on Social Security, 2020 subsumes the 1952 Act. The other three are the Code on Wages, 2019, the Industrial Relations Code, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020.
Mandatory coverage converts informal jobs into recorded, contributing ones, which is why monthly EPFO payroll additions are widely read as an indicator of formal job creation.
Because EPS contributions are calculated on wages up to the ceiling, raising it also lifts the pensionable-wage base on which future pension entitlements are computed.
GS Paper 2 > Governance > Welfare Schemes and Social Security
General Awareness > Government Schemes and Institutions
General Awareness > Financial Institutions and Social Security
The monthly wage threshold below which coverage under a social security scheme is mandatory rather than voluntary.
The Employees' Pension Scheme, 1995, funded by diverting 8.33% of the employer's contribution and framed under Section 6A of the 1952 Act.
Employees' Deposit Linked Insurance Scheme, 1976 - insurance cover attached to EPF membership, with a maximum benefit of Rs 7 lakh.
The Department of Expenditure body, chaired by the Secretary (Expenditure), that appraises central scheme proposals above Rs 500 crore.