New EPF Scheme Caps Contributions at ₹1,800, Higher Amounts Now Voluntary

The Ministry of Labour and Employment has introduced a significant change to the Employees' Provident Fund (EPF) through the new Employees' Provident Funds Scheme 2026, notified on June 29, 2026. Under the new rules, contributions to the EPF beyond the monthly wage ceiling of ₹15,000 – which translates to a monthly contribution of ₹1,800 – are now voluntary for both employees and employers.

Previously, the Employees' Provident Funds Scheme, 1952, mandated that all employees earning a basic wage up to ₹15,000 per month were covered under the EPF. Those earning above this threshold could opt to join voluntarily. However, once enrolled, contributions were calculated on the actual basic wage, meaning both the employee and employer contributed 12% of the actual wage, which could exceed the wage ceiling.

Under the new scheme, the contribution for any member is limited to the amount payable on the wage ceiling, which is currently ₹15,000. This means the maximum mandatory contribution from both sides is ₹1,800 each (12% of ₹15,000). Any contribution on wages beyond the ceiling is now optional, subject to mutual agreement between the employer and employee.

In addition, the employer's contribution to the Employees' Pension Scheme (EPS) remains capped at 8.33% of the wage ceiling, i.e., ₹1,250 per month. The provision allowing higher contributions to the pension fund has been retained only for cases already permitted under the 1995 Pension Scheme.

The change provides flexibility to workers who earn higher wages, allowing them and their employers to decide whether to contribute beyond the mandated ceiling. However, it also means that those who opt out of higher contributions may have lower retirement savings. The government has not yet issued detailed guidelines or clarifications on the transition from the old scheme.