EPF Scheme 2026: The new rules of PF can bring more salary in hand, but is it beneficial or is it going to cause big loss? Know what experts say
PF New Rules: If suddenly Rs 1,000-2,000 more starts appearing in the monthly salary slip, what will be your first reaction? You will be happy, right? But do you know that this happiness can weigh heavily on your old age. EPFO has changed a major rule related to PF. Which is going to affect both your today’s salary and tomorrow’s savings. The biggest thing is that the decision is now in your hands and a wrong decision can be very costly. Let us understand the whole matter and the new rule of EPFO…
What has changed in EPFO rules?
The government has implemented a new PF scheme from June 29, 2026, which has replaced the old system that was in place since 1952. This will affect about 8 crore working people of the country. Earlier, 12% of your basic salary used to go into the PF account every month, no matter what your basic salary was. The company also added the same amount of money. Now under the new rule, 12% will be deducted compulsorily only up to the salary of Rs 15,000, that is, a maximum of Rs 1,800 will be deducted. Whether your basic salary is Rs 50,000, Rs 80,000 or Rs 1 lakh, legally only Rs 1,800 is required to be deducted. The rest of the money is now up to you.
Will EPFO’s new rules increase salary or reduce PF savings?
Financial experts say that both can happen and this is the real problem. If both your company and you agree, then the extra money which was earlier going into PF, can now come directly into your hands. This means that there may be an increase in the monthly in-hand salary. But earlier the money which was saved every month for retirement, will now come into your hands and there is every chance of it being spent and this is where the risk starts.
What harm will happen if you get trapped in the greed of higher salary?
Financial experts say that suppose the basic salary of a 30 year old employee is Rs 40,000. Earlier, Rs 4,800 were deposited into his PF account every month (at the rate of 12%, company’s share is separate). Now if he deposits only the mandatory Rs 1,800, then around Rs 3,000 less will be deposited in PF every month. This difference is not just of one month, but of every month for the next 25-30 years. About 8.25% interest is available on PF and this interest is compounded every year i.e. interest is also earned on the interest. The less money you accumulate, the greater the loss you will see at the time of retirement. This means that taking Rs 3,000 more in hand today can turn into a loss of lakhs of rupees after 30 years.
Will the company forcefully deposit less money?
According to the new rule, the company cannot reduce your PF contribution as per its wish. Your consent is necessary for this. Experts warn that when an offer of ‘higher in-hand salary’ comes from the company, many employees will say yes without thinking, just because more money is visible today. A little wisdom here can benefit you in the long term and at the time of retirement.
What other changes has EPFO made?
Delay in PF claim will now prove costly
It is now mandatory to settle PF withdrawal, pension or insurance claim within 20 days. If there is delay without any valid reason, the responsible officer will have to pay 12% annual penalty interest from his salary. This means that now it will be costly for the officers to take your complaint lightly.
Now facility to withdraw more money from PF
If needed, you can now withdraw a much larger contribution by combining your and the company’s contributions. The only condition is that some minimum amount will always have to be saved in the account, so that the hands are not completely empty at the time of retirement.
Different rules for high salary freshers
If someone’s salary in his first job is more than the prescribed limit, then it is not necessary for him to come under the ambit of PF from the beginning. This is a big decision for those youth who are just starting their career.
Disclaimer: This article is for general information only and does not constitute any kind of financial advice. Before taking any decision related to PF contribution, definitely consult your company’s HR or financial advisor.