The Centre has clarified that (PF) contributions above the statutory monthly limit of ₹1,800 will now be treated as voluntary under the newly notified Employees’ Provident Funds (EPF) Scheme, 2026, bringing greater clarity for employers and higher-salaried employees.
The new scheme, notified on June 29, 2026, replaces the Employees’ Provident Funds Scheme, 1952 as part of the implementation of the Code on Social Security, 2020. While the notification modernises the legal framework governing EPF, it does not change the contribution rate, wage ceiling or the annual EPF interest rate.
What has changed?
Under the EPF law, both employers and employees contribute 12% of wages towards the provident fund. However, this mandatory contribution is linked to the statutory wage ceiling of ₹15,000 a month.
This means the compulsory contribution continues to be capped at ₹1,800 per month (12% of ₹15,000) each for the employee and the employer.
The key change in the EPF Scheme, 2026 is that it explicitly states that where an employee’s monthly wages exceed the notified wage ceiling, both employer and employee contributions will ordinarily be restricted to the wage ceiling. Any contribution on wages above this limit will be voluntary, unless otherwise permitted under the rules.
How was it different earlier?
Under the earlier EPF Scheme, 1952, the ₹15,000 wage ceiling primarily determined whether an employee was mandatorily covered under EPF at the time of joining an organisation.
Once covered, many employers continued calculating on an employee’s actual basic salary, even if it exceeded ₹15,000. In such cases, employees and employers both contributed 12% of the higher salary.
As a result, employees earning significantly above the wage ceiling accumulated a larger retirement corpus through higher monthly PF contributions.
The new scheme formally clarifies that such contributions are not mandatory, but can continue if both the employer and employee choose to do so.
Will your salary or PF savings be affected?
For most EPF subscribers, nothing changes immediately.
Employees whose organisations already restrict PF contributions to the statutory wage ceiling will continue contributing ₹1,800 per month each (employee and employer), unless the government revises the wage ceiling in future.
Employees whose companies currently contribute on their actual basic salary can also continue under the existing arrangement, provided both sides agree. The notification does not prohibit higher contributions; it simply makes clear that these are voluntary rather than compulsory.
This means employers are no longer legally required to match higher contributions solely because an employee wants to contribute more. Whether contributions continue on actual salary will depend on the employer’s policy or employment contract.
What about EPS contributions?
The notification does not alter the existing pension contribution structure.
Following changes introduced in 2014, the employer’s contribution towards the Employees’ Pension Scheme (EPS) has remained restricted to 8.33% of the ₹15,000 wage ceiling, translating into a maximum monthly contribution of ₹1,250.
Any balance from the employer’s statutory 12% contribution continues to be credited to the employee’s EPF account, unless covered under the higher pension provisions.
The EPF Scheme, 2026 also allows employers to contribute higher wages to the pension fund only in cases already permitted under the Employees’ Pension Scheme.
What remains unchanged?
The latest notification is primarily a legal and administrative update under the Social Security Code rather than a benefit overhaul.
The following remain unchanged:
- Mandatory EPF contribution rate of 12% each by employee and employer.
- Statutory wage ceiling of ₹15,000 per month.
- EPF interest rate, which continues to be declared annually by the EPFO.
- Minimum monthly of ₹1,000.
The biggest practical impact is on employees earning above the wage ceiling whose PF contributions are currently calculated on actual salary. The new rules provide greater legal clarity by recognising these higher contributions as voluntary, while allowing existing arrangements to continue through mutual agreement between employers and employees.