India Raises EPFO Salary Ceiling to ₹25,000, Expanding Coverage for 51 Lakh Workers

India's central cabinet, chaired by Prime Minister Narendra Modi, approved raising the mandatory salary ceiling for Employees' Provident Fund Organisation (EPFO) coverage from ₹15,000 to ₹25,000 per month, effective September 17, 2026. This decision expands social security protection to over 51 lakh additional private-sector employees who previously fell outside mandatory coverage.

The move brings workers earning between ₹15,000 and ₹25,000 into the statutory social security framework, granting them access to three key benefits: provident fund savings through the Employees' Provident Fund (EPF), pension security through the Employees' Pension Scheme (EPS), and life insurance protection through the Employees' Deposit Linked Insurance Scheme (EDLI). Previously, new employees earning above ₹15,000 per month were not automatically enrolled in these schemes.

The government cited sustained wage growth and formal employment expansion since 2014 as reasons for the increase. The salary ceiling had remained unchanged at ₹15,000 since September 2014, and minimum wages in several states and sectors have since approached that level. Under the EPS formula, monthly pension is calculated as (pension-eligible salary × years of service) ÷ 70, with an additional two-year service weightage for employees with 20 or more years of tenure. Employees entering the scheme at age 25 with 35 years of service could receive up to ₹12,500 monthly in retirement pension, representing approximately 67% higher benefits than under the previous ceiling.

The measure will increase annual government expenditure on mandatory social security from ₹10,250 crore to ₹11,339 crore, with estimated five-year costs of ₹56,696 crore. The government emphasised that the expanded framework would strengthen employment formalisation, improve workforce retention, and provide workers with greater long-term retirement security. The proposal underwent inter-ministerial consultation and received recommendation from the expenditure finance committee on June 16, 2026.

Currently, EPFO manages one of the world's largest social security systems, covering approximately 7.98 crore contributing members across 7.68 lakh contributing establishments, while the EPS provides pension benefits to approximately 82 lakh pensioners. The revision aligns the mandatory coverage framework with current wage levels and formal employment patterns.