The number of provident fund subscribers in the country is set to increase manifold with the Employees Provident Fund Organisation (EPFO) hiking the monthly salary limit for PF cover to Rs15,000 from the existing Rs6,500.
EPFO expects the hike in wage ceiling to Rs15,000 per month to bring 5 million more employees under the ambit of the social security scheme.
This is in line with finance minister Arun Jaitley's budget announcement that an employee earning up to Rs15,000 per month will have to mandatorily maintain an employee provident fund account.
The minimum pension for EPFO subscribers has also been fixed at Rs1,000 while the insurance limit has also been hiked.
Earlier, it was mandatory for an employee to have a provident fund (EPF) account for s up to Rs6,500 a month and for those with higher incomes, EPFO contributions were voluntary.
But, now, employees earning upto Rs 15,000 have to maintain a provident fund account.
In another move, the EPFO fixed the minimum monthly pension for EPFO schemes at Rs1,000. This will immediately benefit 2.8 million pensioners who get less than this amount at present.
The union budget for 2014-15 has provided Rs250 crore for the purpose.
Under the Employee Provident Fund scheme, 12 per cent of the basic salary of an employee 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 death of an EPFO subscriber, his / her family will be entitled to maximum sum assured of Rs3.6 lakh instead of existing Rs1.56 lakh.
The new norms will come into effect from 1 September 2014.