Minimum pension of Rs 1,000 under EPFO; wage ceiling up at Rs 15,000
More salaried employees will now have to maintain provident fund accounts. The Employees Provident Fund Organisation (EPFO) has hiked the minimum salary limit to Rs. 15,000 from Rs. 6,500 earlier.
Finance Minister Arun Jaitley in the Union Budget had announced that an employee earning up to Rs. 15,000 per month will have to mandatorily maintain an employee provident fund account.
The minimum pension for EPFO subscribers has been fixed at Rs. 1,000 while the insurance limit has also been hiked.
What It Means for You
Earlier, it was mandatory for an employee to have a provident fund (EPF) account if his/her income was up to Rs.6,500 a month. If the employee earned above Rs. 6,500 per month, it was voluntary to have a provident fund account. But now the employee has to maintain a provident fund account if his/her income is up to Rs. 15,000.
According to EPFO’s estimates, the raising of wage ceiling to Rs. 15,000 per month is expected to bring 50 lakh more workers under the ambit of social security schemes run by it.
In another move, the retirement fund body also has also fixed the minimum monthly pension for EPFO schemes at Rs. 1,000. This move will immediately benefit 28 lakh pensioners who get less than this amount at present. Mr Jaitley in the Budget had allocated Rs. 250 crore in the current financial year for this purpose.
Every month, 12 per cent of your basic salary goes into the provident fund account and the employer matches the contribution. Out of the employer’s contribution, 8.33 per cent goes into the Employees Pension Scheme, which offers pension from the age of 58.
The maximum insurance limit for provident fund subscribers has also been hiked under the Employees Deposit Linked Insurance scheme. In case of the death of an EPFO subscriber, his/her family will be entitled to maximum sum assured of Rs. 3.6 lakh instead of existing Rs. 1.56 lakh.
The new norms will come into effect from September 1. (With Agency Inputs)
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