The Employees' Provident Fund Organization (EPFO) in India has announced the reinstatement of a provision allowing employees to contribute to their pensions based on their actual gross salary and dearness allowances. This reinstatement means employees, particularly those in public sector undertakings (PSUs), can once again opt for a higher contribution towards their pensions.

Previously, this option for increased pension contributions based on actual salary was available until September 1, 2014. However, following the establishment of a salary cap for contributions, this facility was discontinued, limiting pension calculations to a maximum salary threshold of INR 15,000. The cap has been a significant issue affecting employees' pension amounts, especially for those whose salaries exceeded this limit.

The EPFO's decision to reinstate this option is a significant development for many employees, as it allows them to maximize their pension contributions based on their actual earnings rather than being restricted by flat salary caps. This move not only addresses past grievances but also aims to enhance financial security for employees during their retirement, thereby benefiting a large section of the workforce that had been previously disadvantaged.