For crores of employees working in the private sector, Provident Fund i.e. PF is not just a monthly deduction but the biggest savings for retirement. In such a situation, when the government decided to make EPF contributions above the salary limit of Rs 15,000 voluntary under the new Employees Provident Fund Scheme 2026, many questions were raised among both employees and companies.
Till now, it was generally the case that once an employee came under the ambit of PF, both the employee and the company would contribute 12-12 percent on his real basic salary, even if his salary was more than the wage ceiling of Rs 15,000 fixed by the government.
In the new rule, contribution on salary up to Rs 15,000 will be mandatory, but depositing PF on the amount above that will depend on the consent of the employee and the company. In such a situation, the question is arising in the minds of Rohit (fictitious name), who works in Noida, and Sneha, who works in a company in Mumbai, that what effect will the new rules have on their salaries. Will the pension fund be reduced? Let us answer one by one all the questions arising in the minds of crores of PF holders like Rohit and Sneha.
Understand the EPS scheme first
Ever since the Labor Ministry has announced under the new EPS Scheme 2026 that now pf It is up to you how much amount to deposit, that is why Rohit is a little confused. Just 2 years ago, after completing Polytechnic from Lucknow, he is working in Noida. Earlier, his salary was less so only Rs 3600 is deposited in PF. But this time the company has promoted him. The money has increased, the basic salary has also increased to more than Rs 15,00 thousand, so now he is thinking what to do, should I leave the same amount or should I increase it. Sneha is also in the same situation, she has also gone to Mumbai after doing a Mass Communication course in Delhi. This is his first job too. Like Rohit, he is also worried about investment. Overall, like Rohit and Sneha, crores of people are still in a dilemma as to what will happen and how. To remove all the confusion, let us tell you some important rules related to the new policy through FAQ. So let’s start.
Question- Now only Rs 1,800 PF will be deducted even on a salary of Rs 1 lakh?
answer- Under the new rules, PF will be deducted with the consent of the employee and the company. Rs 1,800 is the minimum PF amount which is decided from the basic salary of Rs 15,000. Now if someone’s basic salary is Rs 1 lakh and if the basic salary is Rs 50 thousand then it is not necessary that he will have to pay only Rs 1,800. If the person wishes, he can deposit PF on the basic of Rs 50 thousand. This is completely voluntary i.e. your investment is in your hands.
Question: Will retirement savings be curbed now?
answer- If companies and employees choose to contribute only up to the wage ceiling i.e. Rs 1,800 + Rs 1,800 option, then less money will be deposited in the PF account. Due to this, the fund created for retirement in the long run may become smaller. However, the option to contribute more will still be open.
Question- Has the rule of 12% PF deduction ended?
answer- No, the 12% contribution rule still applies. The only change is that this 12% will now be applicable on a minimum wage ceiling of Rs 15,000. Contribution above this is at your discretion.
Question- Is this a new rule or has the already existing system been clarified?
answer- Many experts are considering this not as a completely new rule but as a step to clarify and formalize the old system. However, this has definitely given the companies a clear option to limit the contribution till wage ceiling.
Question- Will the in-hand salary increase due to this decision?
answer- Yes, if the employee PF If the contribution is limited to the wage ceiling of Rs 15,000 instead of the actual salary, then a lesser amount will be deducted every month. Due to this, the salary coming in the hands of the employee can increase because the more money which was deducted from you through PF, will be deducted less and you will get more salary in your hands.
Question- Will it become easier to withdraw money with the new rule?
answer- Under the new rules of EPFO, now the target has been set to settle the correct PF claim within just 3 days, so that the employees will not have to wait long for their money. Along with this, the auto-settlement limit has been increased to Rs 5 lakh and withdrawals are being made easier through digital verification and less paperwork. However, this facility will be available mainly to those members whose UAN, Aadhaar, bank account and KYC are completely updated..
Question- If PF is reduced then how much will the retirement fund be reduced?
answer- It will depend on how much PF was being deposited earlier and how much will be deposited now. The impact of low contributions over a long period of time can be huge due to compound interest and the final corpus can be reduced by lakhs of rupees.
Question- Can employees deposit more PF than they wish?
answer- Yes, PF contribution can be continued on the actual basic salary or even more if the employee and employer agree. The new rule has not eliminated this option.
Question- What will be the impact on EPS (pension) due to reduction in PF?
answer- Employer contribution to EPS is already limited to a wage ceiling of Rs 15,000. Therefore, this change will not have any major impact on the pension calculation of most employees.
Question- Will the corpus received at the time of retirement become smaller?
answer- If the employee contributes only the minimum PF for a long time, then the total amount received at the time of retirement may be less than before. The biggest reason for this is less investment and less interest earned.
Question- If an employee deposits 1,800 PF for 30 years, then how much fund will be created on retirement?
answer- If a total of Rs 3,600 is deposited per month from both the employee and employer and an average annual interest of 8-8.5% is received, then after 30 years a fund of about Rs 50-55 lakh can be created. The actual amount will depend on the interest rate and salary increase.
Question- If the same employee keeps depositing Rs 12,000 per month in PF, then what will be the retirement corpus?
answer- If a total of Rs 24,000 is deposited per month by the employee and employer and an average interest of 8-8.5% is given, then after 30 years the retirement corpus can reach around Rs 3.3-3.7 crore. This is why higher PF contributions make a bigger difference in the long run.
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