EPFO Clarifies EPS Eligibility After Wage Ceiling Hike to ₹25,000

The Employees’ Provident Fund Organisation (EPFO) has clarified the eligibility criteria for its Employees’ Pension Scheme (EPS) following an increase in the monthly wage limit for mandatory coverage. Effective September 17, 2026, the wage limit for mandatory EPFO coverage was raised from ₹15,000 to ₹25,000 per month. This change, according to the Ministry of Labour & Employment, is projected to extend statutory social security benefits to over 51 lakh additional employees, particularly those earning between ₹15,000 and ₹25,000 monthly who were previously excluded from mandatory coverage.

EPFO recently issued a post on X explaining the nuances of EPS eligibility, which is distinct from the Employees’ Provident Fund (EPF). The clarification outlines two key conditions: if your monthly salary is ₹25,000 or less, EPS membership is mandatory as per eligibility, and contributions will be deducted. However, if your monthly salary exceeds ₹25,000, and you were not an EPS member previously, then EPS membership is not mandatory, and contributions will not be deducted. This means that both your current monthly wage and your prior EPS membership status determine whether you qualify for the scheme.

Understanding how employer contributions are split between EPF and EPS is crucial. The EPF aims to help employees accumulate retirement savings, while the EPS provides pension benefits. Under the standard contribution structure, an employer contributes 12% of an employee's eligible wages. Of this, 8.33% of pensionable wages is specifically allocated to the EPS, subject to the applicable wage ceiling and scheme provisions, with the remaining balance credited to the EPF. For example, if the applicable pensionable wage is ₹25,000 per month, the employer’s total 12% contribution amounts to ₹3,000. From this, ₹2,082.50 (8.33%) would go towards EPS, and the remaining ₹917.50 would be directed to EPF. It's important to remember that these calculations illustrate the contribution split at a specific wage level, and the actual allocation will depend on the employee’s individual eligibility and the prevailing EPF and EPS rules.

For employees who find discrepancies in their EPS contributions, EPFO has provided clear guidance. If your wages are ₹25,000 or less and EPS contributions are not being deducted, or if contributions are being deducted despite your ineligibility (i.e., wages are more than ₹25,000 and you were not a previous EPS member), you should first contact your employer. It is advisable to verify your membership history and the applicable eligibility conditions before concluding that a contribution has been incorrectly withheld. If the issue remains unresolved after consulting with your employer, employees can then escalate their grievance through the EPF i-Grievance Management System (EPFiGMS) portal for further assistance.

What to watch: Employees should verify their EPS eligibility and contribution status with their employers.

Editor's note: The article clearly explains the complex EPFO/EPS eligibility and contribution changes with the provided examples.