On 16th September 2026, the Indian Union Cabinet announced a huge revision in the way the statutory ceiling under which the formal Indian workforce would get compulsory inclusion in the scheme of provident fund, increasing the statutory ceiling for compulsory inclusion under the Employees' Provident Fund Organisation (EPFO) to ₹25,000 from ₹15,000 per month.
The amendment was made on the very next day of the announcement, i.e., on 17th September 2026, coinciding with Vishwakarma Jayanti and Sewa Divas. The decision was the first revision of the ceiling after September 2014, when the ceiling was last revised to ₹15,000.
The new ceiling, as estimated by the government, will make an addition of more than 51 lakh employees eligible for mandatory coverage under the EPFO, thereby making available the benefits of the Employees' Provident Fund (EPF), the Employees' Pension Scheme (EPS), and the Employees' Deposit Linked Insurance Scheme (EDLI).
As per the EPFO regime, an employee joining at a higher monthly salary than the statutory ceiling cannot be compulsorily enrolled in the scheme of provident fund and pension scheme.
The limit was fixed at ₹15,000 per month for more than a decade. Even though employees who earn slightly higher than this could choose to voluntarily enroll in some cases, there are many new recruits whose income is just higher than the limit and who do not enter into the formal social security net.
By fixing the new ceiling at ₹25,000, the government has essentially realigned the boundary line, which has stood since more than a decade. Now, a section of workers whose income exceeded this limit years ago gets included in the social security system. Officials have justified the decision as a move towards achieving "Viksit Bharat @2047.”
However, the increase in the wage ceiling itself could not decide how the existing members of the provident fund were to be dealt with.
This was done in a separate notification dated 25 September 2026, passed by the Ministry of Labour and Employment in accordance with Section 15 of the Code on Social Security, 2020.
It added a new clause to the seventh paragraph of the Employees' Pension Scheme, 2026, which made it applicable to "any employee who has been a member of the Employees' Provident Funds Scheme, 2026, but not a member of this scheme," provided that his or her wages on the date of notification of the new ceiling were below ₹25,000.
As one can see, this resulted in the automatic enrollment of such employees into the pension scheme without making any additional applications for it.
The notification was also retroactive in nature, effective from 17 September 2026, the same date as the increase in the wage ceiling itself.
Employees with wages over ₹25,000 on the date of the notification are excluded from this procedure.
The mechanics of the financing process have remained the same; only the level has increased.
The standard 12 percent share of the employer’s total payment is split such that 8.33 percent is allocated to the EPS pension fund based on salary ceilings of ₹25,000 as opposed to the previous level of ₹15,000.
An employee’s final pension is determined by the following formula: Pensionable Salary x Pensionable Service / 70 Since the effective base on which pensions will be calculated has increased significantly, commentators following the development have observed substantial hikes in pension contributions of employees who will be covered under the increased ceiling, with predictions pointing out that pension contributions made under the new ceiling could be increased by about two-thirds from the old base of ₹15,000.
The increase in the wage ceiling and the automatic enrollment provision represent only a partial aspect of the overall review of the pension system in India according to the government itself.
In addition to the already approved changes, the Labour Ministry has been said to have prepared a conceptual framework for the introduction of the "Universal Pension Scheme," which will be introduced in line with the EPS—a more flexible system aimed at accommodating gig workers, the self-employed, and people from the unorganized sector who do not fit into the employer-employee arrangement characteristic of EPS.
This particular suggestion is still in a very preliminary phase, as there is neither any scheme introduced nor any particular contribution amount specified nor any interest rate/pension amount fixed.
The new scheme will coexist with the already available scheme of 1995 rather than replace it and will provide for flexible contribution and withdrawal options based on the "Target Retirement Sum.”
