Sunita Somvanshi
Your salary slip is about to change if you earn above ₹15,000 per month and work for a registered employer. The Employees’ Provident Fund Organisation has issued a clarifying circular on how the raised ₹25,000 wage ceiling applies to EPS-95 pension enrollment—going beyond the government’s initial wage ceiling hike notice to address exactly who must enroll, who is exempt, and what happens to employees caught between the two thresholds.
The statutory wage threshold for mandatory EPF and EPS coverage has moved from ₹15,000 to ₹25,000 per month. Employees joining an EPFO-registered establishment with a basic pay plus dearness allowance up to ₹25,000 are now eligible for enrollment in both EPF and EPS-95, subject to applicable statutory provisions and scheme rules. The employee contributes 12% of eligible wages to EPF. The employer’s contribution is divided: 8.33% of eligible wages goes to the EPS-95 pension pool and the balance (3.67%) goes to the employee’s EPF accumulation account. The Central Board of Trustees confirmed that employees whose basic pay was already above the previous ₹15,000 threshold are not automatically retrospectively enrolled—the exact conditions for existing employees are governed by the applicable scheme rules.
For employees newly brought within coverage, employee PF deductions rise to ₹3,000 on a ₹25,000 basic wage. The mandatory change also brings automatic coverage under the EDLI life insurance scheme, subject to EPFO’s current scheme rules. Employees must serve a minimum of 10 contributory years to qualify for the monthly pension—and should note that withdrawal benefits or a scheme certificate may be available for those who leave before completing 10 years of service.
EPS-95 Pension Formula and the ₹12,500 Monthly Cap
The EPS-95 monthly pension at superannuation is calculated as:
Monthly Pension = (Pensionable Service × Pensionable Salary) ÷ 70
Under the old ₹15,000 ceiling, the maximum pensionable salary was capped at ₹15,000, giving a maximum illustrative pension of ₹7,500 after 35 years of service. With the ceiling now at ₹25,000, the maximum EPS contribution rises to ₹2,083 per month, and the illustrative maximum monthly pension rises to ₹12,500 for employees who complete full qualifying service under the scheme’s rules.
For workers newly covered between ₹15,001 and ₹25,000, employer contributions to EPS begin at a mandatory ₹2,083 per month. This amount is drawn from the employer’s statutory contribution, reducing the amount flowing into the EPF accumulation account.
Shifting 8.33% of eligible wages monthly into the pooled, formula-based EPS-95 fund provides different retirement returns than the compounding EPF account depending on tenure and individual circumstances. The EPS-95 fund functions as a defined benefit scheme. Members who exit before completing 10 years of service may be eligible for a withdrawal benefit or a scheme certificate, rather than the monthly pension.
Who is mandatorily covered under the ₹25,000 EPF wage ceiling?
Employees joining an EPFO-registered establishment with a basic plus DA up to ₹25,000 per month are eligible for enrollment in both EPF and EPS-95, subject to applicable statutory provisions. Existing employees whose basic pay was already above the previous ₹15,000 threshold should check with their employer on the applicable transition rules under the current EPFO notification.
Salary slips should reflect the updated deduction structure from the next payroll cycle after EPFO’s implementation date. Check your payslip against the revised contribution breakdown and raise a query with HR if deductions do not match the new threshold schedule before the November payroll cutoff.
