The Employees' Provident Fund Organisation (EPFO) is developing a framework to provide social security to millions of people working in the informal sector, in unregulated enterprises, as well as to gig economy workers and self-employed individuals who are currently outside its network.
Fund Accumulation Mechanism
This will allow new participants to deduct a portion of their income under a universal pension fund scheme. This accumulation phase is based on the existing EPFO model, allowing new subscribers to make contributions daily or annually. The accumulated capital will earn annual interest and benefit from similar tax exemptions. This means complete tax exemption for an annual contribution up to 2.5 lakh, including interest on it.
Changes in Withdrawal Phase
The agency plans to significantly modernize the withdrawal phase. According to the proposal, subscribers can keep their capital in EPFO even after retirement, which may be extended to current members. Under the proposed model, new subscribers may be offered a systematic withdrawal plan option, giving them freedom to choose the order of payment—whether advanced or deferred. An official representative told TOI that the agency was studying models such as those used in Singapore to develop the basic structure.
Financing and Goals of the Reform
Unlike the PM Shram Yogi Maandhan Yojana scheme, which provides 50% co-financing from the Central Government for retirement, this scheme will be fully funded by the individuals themselves. This step is being taken as the Ministry of Labour seeks to ensure pension savings outside the current scope of EPFO, which covers employees of enterprises with more than 20 staff.
Implementation and Future Prospects
Although EPFO has not yet received an official mandate, the agency has tendered for the development and creation of the IT architecture to fulfill this task. As part of the implementation of new labour codes, the government has mandated platforms such as taxi aggregators or delivery apps to register their workers through a special portal. If the EPFO scheme is approved, for example, a freelance consultant could plan their retirement by contributing to the new model. An official representative noted: 'The new social security code gives the government the ability to ensure that everyone has access to some form of social coverage. Discussions are in the initial stages, and various global models are being studied. It will be a self-funded model, without using budgetary support.'


