The Employees' Provident Fund Organization (EPFO) has made several major changes to the Provident Fund (PF) scheme for private sector employees. Under the new Employees' Provident Fund Scheme, 2026, the rules regarding PF contributions, withdrawal of advances, and employer responsibilities have been clarified and simplified.

How much PF contribution will have to be paid now?

According to the new rules, both the employee and the employer will be required to contribute 12% each, up to the current salary limit of ₹15,000 per month. If the employee's basic salary exceeds ₹15,000, any contribution above this limit will be completely voluntary.

For example, if an employee's basic salary is ₹1 lakh, the required PF contribution will still be based on the ₹15,000 limit. That is, ₹1,800 will be deposited from the employee's account and ₹1,800 from the employer's account. However, if employees wish, they can voluntarily contribute additional amounts to their PF account to save more for retirement.

What are the new rules regarding additional contributions?
Under the new scheme, employees can choose to make additional PF contributions even if their income exceeds the prescribed salary limit. There will be no compulsion to do so. The employer can also contribute an amount equal to the employee's additional contribution, but this will be entirely at their discretion. Both the employee and the employer can decide to reduce or stop these additional contributions at any time.

Withdrawals from PF have become easier.
The EPFO ​​has also significantly simplified the rules for advance withdrawals. Previously, there were 13 categories for various needs, but these have now been reduced to just three. These include essential personal needs such as illness, children's education and marriage, special household needs, or emergencies.

According to EPFO, the purpose of this change is to make it easier for members to use their retirement savings as per their needs.

Under the new system, employees can now withdraw up to 100%
of their eligible balance in advance. The eligible balance includes both employee and employer contributions. However, there is a condition: Employees must maintain a minimum balance of 25% of their total contribution in their PF account.

Salary Structure Changes
In private companies, most employee salaries are determined based on the cost-to-company (CTC) model. Therefore, the employee and company can mutually agree on changes to the salary structure to better plan PF contributions and retirement savings. There are no changes to the existing rules regarding PF membership. Employees who are already EPF members will continue to be members.

What has changed for contract employees?
The new scheme also addresses the interests of contract employees. The responsibilities of the "principal employer" have been clarified. If the contractor does not have a separate EPFO ​​registration, the primary employer will be responsible for the PF contributions for such employees. If the contractor is already registered, the responsibility for this contribution will be theirs.

New Compliance Rules for Companies
Under the new scheme, companies will now have to follow certain additional compliance rules. Every employer will be required to submit a joint return in Form V within 15 days of the scheme's implementation. This will include essential information such as Aadhaar number, PAN, Universal Account Number (UAN), total salary, and EPF salary of all employees.

Why were these changes made?

According to the EPFO, all these changes have been discussed in detail by the Central Board of Trustees (CBT). These changes aim to provide employees with greater flexibility in retirement savings, simplify the PF withdrawal process, and ensure compliance with new labor laws.

PC: Navrashtra