EPFO Update: EPFO Board to Meet in July to Discuss Universal Pension Scheme

The Employees Provident Fund Organization's (EPFO) central board will meet on July 8 and may decide to create a separate pension plan specifically for gig workers as well as explore the possibility of creating a universal pension plan for everyone who is not yet covered by the retirement fund. The central board of trustees (CBT) is discussing the recommendations of a committee on pension reforms, and at a recent meeting, members expressed a variety of opinions on the best course of action.

More discussions have already taken place since March, some of which involved industry specialists. According to at least two individuals with knowledge of the situation, a detailed note will likely be presented to the central board.

After addressing EPFO's organizational issues, "a separate system for offering PF and pension benefits may be developed," said a government official who wished to remain anonymous.

More than 717,000 gig workers in India have been legally registered, and just West Bengal, Uttar Pradesh, and Bihar account for about 58 percent of them. Such a provision has been called for by the social security legislation on labor, but in the past 1.5 years, little has changed.

As merging the existing subscribers and gig employees may cause operational hitches due to the nature of the duties both sides (formal workers and gigs) present, an internal committee has recommended establishing a distinct plan for gig and platform workers, the official added.

When the board meets in the second week of July, "only just PF for gig workers, but instead a universal pension scheme for all," according to a CBT member who also declined to be identified. Undoubtedly, the agenda topics to be presented at the two-day board meeting scheduled to take place in Bangalore are still being finalised by the EPFO, which is under the control of the labour ministry.

A new universal pension scheme "may be explored in view of the clarion call of Hon'ble Prime Minister on universal social security and global trends, to accommodate to those not covered under EPS 95 include Gig workers and self-employed persons," according to documents reviewed by Moneycontrol.

"The Universal Pension may contain provisions for a 3,000-rupee minimum pension, which requires a corpus of almost 5.4 lakh rupees and more than 15 years of work. The majority of nations now have defined contribution plans instead of defined benefit plans. According to official records, which were also distributed to the board members at some point earlier in this fiscal year, defined contribution pension schemes "enable individual accounting and sums appropriate to the savings."

The working class has been calling for an increase in the pension under the EPFO's employees' pension system (EPS). However, the pension fund is unable to pay a minimum pension of Rs 3,000 per month due to the inadequate contribution that EPF users now make to EPS.

A statutory EPF deduction is a monthly payment made by an employee equal to 12% of his basic pay and a portion of some allowances. The employer contributes a matching sum. 8.33 percent of the employer's portion, or 12 percent, goes to EPS.