Withdrawal of money from PF account has become very easy, now funds up to Rs 5 lakh will come directly into the bank account in just 3 days.

For crores of employees of the country working in the private sector, Provident Fund (PF) is not just a minor salary deduction every month, but it is their biggest capital and savings after retirement. In such a situation, when the government decided to make the EPF contribution above the wage ceiling of Rs 15,000 completely voluntary i.e. optional under the new Employees Provident Fund Scheme 2026, many big questions have arisen among both the employees and the companies.

According to the general rules till now, once an employee came under the ambit of PF, both the employee and his company would contribute 12-12 percent on his actual basic salary, even if the basic salary of that employee was more than the fixed limit of Rs 15,000 fixed by the government.

But under the new rule, now PF contribution on salary up to Rs 15,000 will be absolutely mandatory, but depositing PF on the salary amount above that will completely depend on the mutual consent of the employee and the company. In such a situation, serious questions are arising in the minds of Rohit (name changed), working in an IT company in Noida, and Sneha, working in a firm in Mumbai, that how will this new rule affect their take-home salary? Will their pension fund get reduced in future? Like Rohit and Sneha, let us answer all the important questions arising in the minds of crores of PF holders of the country one by one in simple language.

What is the new EPS Scheme 2026 and why is there confusion?

Ever since the Union Labor Ministry has made this big announcement under the new EPS Scheme 2026 that the amount of PF to be deposited will largely depend on you, Rohit is a little confused. Rohit had completed his polytechnic studies from Lucknow just two years ago and is now doing his first job in Noida. Initially his salary was less, so his PF was also deposited as per the rules, a total of Rs 3,600 (employee and company together). But this year the company has given him a great promotion due to which his basic salary has also increased to much more than Rs 15,000. Now Rohit is confused whether he should keep his PF contribution the same or increase it according to his increased salary.

Similar is the condition of Sneha, who after completing Mass Communication course from Delhi, has started her new innings in a media company in Mumbai. This is her first job too and like Rohit, she is also a little worried about her investments and future savings. Overall, crores of youth and employed people of the country are still in dilemma and confusion about what and how will happen next. To clear all their confusion, let us understand the important rules related to this new policy through direct questions and answers (FAQ).

Accurate answer to all your questions related to new PF rules

Question- Will now only Rs 1,800 PF be deducted even if the basic salary is Rs 1 lakh? Answer- According to the new rules, now deduction of PF on salary above Rs 15,000 will completely depend on the consent of the employee and the company. Rs 1,800 is the minimum PF amount which is decided by the basic salary limit of Rs 15,000. Now let us assume that the total salary of a person is Rs 1 lakh and his basic salary is Rs 50,000, then it is not at all necessary that his PF will be deducted only Rs 1,800. If the employee wishes and the company agrees, then he can deposit 12% PF on his entire basic salary of Rs 50,000. This is completely voluntary, that is, your investment is now in your hands.

Question- Will this new decision put any restrictions on retirement savings in future? Answer – Yes, if companies and employees choose to contribute only up to the wage ceiling i.e. the minimum limit (i.e. Rs 1,800 from the employee’s side and Rs 1,800 from the company’s side), then obviously less money will be deposited in your PF account every month. The direct effect of this will be that in the long run, the total fund in your hand at the time of retirement may be quite small. However, if you want a larger fund for the future, the option to contribute more is still wide open.

Question- Has the government permanently abolished the rule of 12% PF deduction from salary? Answer- Not at all, the old rule of 12% PF contribution from basic salary is still fully applicable. The only change made in this is that this mandatory deduction of 12% will now be binding only on the minimum wage ceiling of Rs 15,000. It is now left to your choice whether to deduct 12% on the salary above this or not.

Question- Is this a completely new rule of the government or has the old system been cleaned up? Answer- Many big experts and experts in this matter are not considering this as a completely new rule. He says that this is a step to make the old system more clear, transparent and formal. However, after this clarification, now the companies have got this legal and clear option that if they wish, they can limit their contribution only to the wage ceiling of Rs 15,000.

Question- The biggest question for common employees is, will this decision increase the take-home salary received every month? Answer- Yes, your pocket will get direct benefit from it. If an employee chooses to limit his PF contribution only to the wage ceiling of Rs 15,000 instead of his actual salary, then less money will be deducted from his salary every month in the name of PF. With this, the huge portion that was deducted through PF will be stopped and the net take-home salary you receive every month will increase.

Question- With the arrival of new rules, will it become easier than before to withdraw money from PF account? Answer- Yes, under the new rules of EPFO, now the target has been set that all the correct and valid PF claims should be settled completely within just 3 days, so that the employees do not have to wait long for their hard-earned money. Along with this, the auto-settlement limit has also been increased to Rs 5 lakh. The entire process is being made extremely simple through digital verification and very less paperwork. However, employees have to keep in mind that this superfast facility will be available mainly to those members whose UAN, identity card, bank account and KYC are completely updated online.

Question- If I reduce PF today, how much can my fund reduce at the time of retirement? Answer- It will completely depend on how much PF was being deposited in your account earlier and how much you are depositing after the new rule. The effect of making less contribution during a long service period is huge due to compounding interest. Due to this, the final corpus received at the time of retirement may be reduced by lakhs of rupees.

Question- Can companies stop employees, or can employees deposit more PF than they wish? Answer- Employees have full rights. If both the employee and the employer (company) agree, then the PF contribution can be continued as before at or above the actual basic salary. The new rule has not closed this excellent option at all.

Question- Due to reduction in PF deduction, will there be any negative impact on my EPS (EPS i.e. pension)? Answer- No, there is no need to worry about pension. The company’s contribution to EPS has already been limited to a maximum wage ceiling of Rs 15,000. Therefore, this new change will not have any major or negative impact on the calculation of future pension of most of the employed employees of the country.

Question- Will the entire retirement corpus received in the end be very small? Answer- Yes, if an employee opts for only minimum PF contribution (Rs 1,800) during his entire employment (for a long time), then the total maturity amount received at the time of retirement can be much less than before. The biggest and main reason for this is less investment every month and less interest on it.

Understand mathematically: Big difference of ₹ 1,800 vs ₹ 12,000

Question- If an employee deposits only ₹ 1,800 in PF every month for 30 years, then how much total fund will he get on retirement? Answer- If a total of Rs 3,600 is deposited in the PF account every month from both the employee and the company and an average annual interest of 8 to 8.5% is received on it, then after completion of 30 years of service, the total retirement fund of that employee can be around Rs 50 to 55 lakh. However, the actual amount will also depend on the interest rate changing from time to time and your salary increase.

Question- And if the same employee continues to contribute ₹ 12,000 every month to PF by not opting for the new rule, then what will be the retirement corpus? Answer- Now understand this big difference carefully. If a total of Rs 24,000 is deposited in the PF account every month, including the share of both the employee and the company, and the average interest on this is only 8 to 8.5%, then the retirement corpus received after 30 years can directly skyrocket to around Rs 3.3 crore to Rs 3.7 crore. This is why a little extra contribution to your PF account makes your old age stick stronger in the long run.