PF wage limit enhanced to Rs.15,000

1^st September 2014 will see an increased PF contribution due to enhancement of the PF statutory wage limit by 130% from Rs. 6,500 to Rs.15,000. This social security measure will now match the ESI contribution limit.

Click for the Notification: PF Notification

Let’s look at the impact of the amendment in the gazette notification dt. 22-08-2014 –

1. The company which is currently limiting PF contribution to Rs.6500/- will now have to increase the contribution limit to the actual wages above Rs. 6500 up to maximum of Rs.15000/-. 
2. The employees who have already opted out from PF coverage (whose basic is above Rs.6500) should be covered under the scheme incase their wages is up Rs.15000/- per month).
3. The minimum pension amount increased from Rs.541/- to Rs.1000/- per month. 
4. Increase in EDLI benefit by 20%.

This amendment is a double edged sword, both for the employer as well as the employee. The payout in the form of contribution is going to impact the finances of the establishment. If the employer, like in the case of a Contractor, is operating on fixed contract amount then they in for a financial shock. The figures escalate like this

The employer’s payout goes up by Rs. 2177 per month per employee. The employees have reasons to rejoice as their contributions would go up in case their wages were limited to Rs. 6500. But the larger workforce who are daily wagers would all not immediately appreciate the fact that this enhanced contributions are only adding to their inbdivudual PF kitty as they would rather prefer a better take home. But it is just a matter of time when each beneficiery would relook at the fact that this PF contribution would be their priced saving for the future.