Big news for the over 70 million employees contributing to the Employees’ Provident Fund (EPF) in the country! The government is considering removing the 12% contribution limit for EPF. The goal is to provide greater benefits to employees upon retirement. Employees who wish to receive higher pensions or funds after retirement will be given the opportunity to contribute more to their EPF. This would mean the end of the 12% contribution limit.
A senior official from the Ministry of Labour stated that the purpose of this reform is to ensure employees receive higher pensions and funds after retirement. Therefore, discussions are underway to eliminate the 12% contribution cap in investment options. Currently, both the employer and employee are required to contribute 12% of the basic salary each. The Employees’ Provident Fund Organisation (EPFO) is now considering removing this 12% cap.
Who Will Be Affected by the Change
According to the official, the removal of the 12% contribution cap will apply only to employees, not employers. This change will benefit around 67 million employees across the country. The government’s goal is to allow employees to invest a larger portion of their earnings in EPF, ensuring they have more funds for living expenses after retirement.
Employer’s Contribution
As per EPFO rules, currently, out of the 12% contribution made by the employer, 8.33% is directed to the employee’s pension scheme account, while the remaining 3.67% is deposited into the employee’s EPF account. The maximum contribution limit for this is ₹15,000 per month. Employees who joined after September 1, 2014, can contribute up to 8.33% or a maximum of ₹15,000 to their pension fund.
Also Read- EPFO’s Major Announcement: Manage Your PF Account Easily from Home Using the Umang App
Rules for Employees
EPFO has set specific rules for employees’ contributions as well. Employees who joined the service before September 1, 2014, and opted for the joint option can contribute 8.33% of their salary to their pension fund. The government is considering removing this limit so that employees can contribute as much as they wish to their pension fund. Employees will also be given an option to contribute a lump sum amount or more money to their pension fund, as per their preference.