More than 17.49 lakh EPF members opted for the higher pension option, stated Shobha Karandlaje, Minister of State for Labour and Employment, in a written reply to the Lok Sabha on December 16, 2024. In her response, Karandlaje said, “In implementation of the judgment dated 04.11.2022 passed by the Hon’ble Supreme Court in SLP No. 8658-8659 of 2019, an online facility was provided by EPFO, wherein a total of 17.49 lakh applications for Validation of Option/ Joint Options were successfully submitted by the applicants.”

The EPF is one of India’s largest social security schemes, with nearly 30 crore accounts enrolled, according to EPFO’s annual report for 2022-23.

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What Is The Higher Pension Option In EPFO?

Under the EPF scheme, both the employee and the employer contribute 12 per cent of the employee’s basic salary to the EPF accounts. An employee’s full contribution goes toward the Employees’ Provident Fund (EPF), while the employer’s contribution is split, 8.33 per cent goes to the Employees’ Pension Scheme (EPS), and 3.67 per cent to EPF.

However, the salary threshold for these contributions is fixed at Rs 15,000, even if an employee’s basic salary exceeds this limit.

In a landmark judgment on November 4, 2022, the Supreme Court allowed eligible employees to opt for a higher pension under the EPS 1995, based on their actual salary. In compliance with this ruling, EPFO provided existing eligible employees the choice to opt for it until July 11, 2023. The employers are required to complete the validation process of such requests by May 31, 2024.

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How Is Higher Pension Calculated?

According to EPFO’s frequently asked questions, the formula for calculating the higher pension remains the same.

For pensions commencing before September 1, 2014: The pension is calculated based on the average salary of the preceding 12 months from the exit date from EPF.

For pensions commencing on or after September 1, 2014: The pension is calculated using the 60-month average monthly salary during contributory service preceding the exit date from EPF.

Growth In New EPFO Subscribers Since 2020-21:

In a separate written reply addressing a question on the four per cent decline in the new subscribers in EPFO in 2023-24, Mansukh Mandaviya, Minister of Labour and Employment, presented the following data:

Financial Year Number of New EPF Subscribers

2020-21 85,48,898

2021-22 1,08,65,063

2022-23 1,14,98,453

2023-24 1,09,93,119

2024-25 (April–Sep) 61,46,445

Source: Mansukh Mandaviya’s written reply in Parliament, December 16, 2024

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Mandaviya stated, “In the current financial year, 56 per cent of the new EPF subscribers from the last financial year, i.e., FY 2023-24, have already been added in the first six months, indicating robust growth in new EPF subscribers.”

Now, the government is also considering raising the wage ceiling for EPF contributions from the current Rs 15,000 to Rs 21,000 to enhance social security, according to media reports. Notably, the wage ceiling was last raised 10 years ago from Rs 6,500 to Rs 15,000 in 2014.