PF Wage Limit: If you are a salaried class then this news will make you happy. Yes, the government is considering increasing the amount deposited in the Employee Provident Fund Organization (EPFO) and the Employee Pension Scheme (EPS).
This claim has been made in a report published in Financial Express quoting Labor Minister Mansukh Mandaviya. Currently, the money which is deposited in EPFO and EPS every month from the salary of the employees, after this that limit is expected to be increased. Currently, there is a limit of Rs 15000 under the Employees Provident Fund.
More money will be deposited in EPFO and EPS
Earlier this limit was Rs 6500, which was last increased to Rs 15000 in the year 2014. There has been no change in it since then. Now the government is considering increasing this limit to Rs 21000. This simply means that employees will be able to deposit more money in EPFO and EPS than before. After the new rule is implemented, crores of salaried class will get its benefit. This will also affect the pension received by employees after retirement.
How does EPFO rule work now?
Currently, if an employee’s monthly salary is Rs 15,000 or more, then the employee and the employer have to deposit 12% each in EPF. But the employer’s money is divided into two parts. Out of this, 8.33% goes to EPS (Employees Pension Scheme) and the remaining 3.67% is deposited in EPF. In such a situation, an employee with a salary of Rs 15,000 will have to deposit 12% i.e. Rs 1800 in the EPF account every month. Apart from this, your company will also deposit 12% of the salary i.e. Rs 1800. But this money will be divided into two parts, EPF and EPS. Out of this, Rs 1250 goes to EPS and the remaining Rs 550 goes to EPF.
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What will be the new EPFO limit?
If the government increases the limit to be deposited in EPF from Rs 15,000 to Rs 21,000, then the calculation will also change. On a salary of Rs 21,000, Rs 2,520 will be deducted as PF every month at the rate of 12 percent. Apart from this, out of the same contribution given by the company, Rs 771 will be deposited in the EPF account and the remaining Rs 1,749 will be deposited in the EPS account.
What will be the benefit of increasing the wage ceiling?
If an employee starts depositing money in EPF at the age of 23 and continues to do so for 35 years, then on a basic salary of Rs 15,000, he will get a total of Rs 71.55 lakh at the time of retirement. Out of this, Rs 60.84 lakh will be only interest. While the amount deposited by him is Rs 10.71 lakh. This calculation is based on an annual interest of 8.25%. But if the government increases the limit of money deposited in EPF from Rs 15,000 to Rs 21,000, then that employee will get a total of one crore rupees. Out of this, Rs 15 lakh will be deposited by the employee and the remaining Rs 85 lakh will be interest. That is, the concerned employee will get Rs 28.45 lakh more than before.
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