Millions of private sector employees may soon receive a major boost in their retirement benefits. The Employees’ Provident Fund Organisation is considering increasing the salary cap for the Employees’ Pension Scheme from ₹15,000 to ₹25,000. This proposal has sparked nationwide interest because a higher salary limit will directly increase monthly pension contributions and expand pension coverage for over 6.5 crore workers across India. If approved, this will be the biggest change to EPS-95 in years.
EPFO May Increase the Salary Threshold to ₹25,000
EPS-95 currently calculates pension benefits based on a maximum salary limit of ₹15,000. The new proposal aims to raise this limit to ₹25,000, aligning pension contributions with rising inflation, lifestyle needs and modern salary structures. With an increased threshold, both employers and employees will contribute more toward the pension fund, strengthening long-term retirement security. Discussions within EPFO committees suggest that the proposal has gained strong support due to its long-term positive impact.
How This Change Will Benefit Employees
If the salary cap rises to ₹25,000, the monthly pension contribution is expected to surge by nearly 66 percent. This means employees will accumulate higher pensionable service value, resulting in a substantially bigger pension after retirement. Many workers who currently feel that EPS-95 offers low monthly payouts could finally receive pensions that are more practical and better aligned with modern living costs. The move will especially benefit middle-income salaried employees who fall between the current and proposed salary slabs.
Who Will Be Covered Under the New EPS-95 Limit
More than 6.5 crore employees are likely to come under the new salary cap once the proposal is approved. Workers earning between ₹15,000 and ₹25,000 a month, who currently do not receive full pension benefits due to the existing cap, will now be fully eligible. New employees joining the workforce in private companies will also fall under the revised bracket, expanding pension coverage across all major sectors.
How Much Will Pension Contributions Increase
An increase in the salary limit would automatically raise monthly contributions made by employers. Currently, employers contribute 8.33 percent of ₹15,000 toward EPS-95. Under the proposed structure, 8.33 percent will be calculated on ₹25,000, which means the monthly contribution will jump significantly. This additional contribution will strengthen pension accumulation, giving employees higher lifetime earnings and improved financial stability in old age.
Why EPFO Is Considering This Major Change
The need for higher pension support has been a long-standing demand from employee unions and welfare associations. Rising cost of living, higher salaries across industries and the growing disparity between savings and expenses have pushed the EPFO to rethink pension formulas. Increasing the salary limit is seen as a modernisation of EPS-95, making it more relevant for today’s workforce and more sustainable for future generations.
When Will the New EPS Salary Cap Be Implemented
The proposal is currently under review and may soon be presented before the Central Board of Trustees. After internal approvals, the change will require final clearance from the Labour Ministry. If all approvals move smoothly, employees may see the updated salary cap and pension structure introduced in upcoming financial cycles. Experts believe that the government is keen to enhance pension benefits before major economic announcements next year.
Conclusion: The potential revision of the EPS-95 salary cap from ₹15,000 to ₹25,000 signals a major step toward strengthening India’s retirement framework. With over 6.5 crore employees set to benefit and monthly pension contributions expected to rise sharply, this update could significantly improve financial security for millions of working individuals. Employees should stay alert for official announcements as EPFO finalises the framework.
Disclaimer: This article is based on ongoing discussions and proposals under consideration. Final rules and benefits may vary after official notifications from EPFO or the government.
