New Delhi: The Employees’ Provident Fund Organisation (EPFO) is preparing to roll out its next phase of reforms, dubbed EPFO 3.0, with an ambitious agenda to expand social security coverage across India’s workforce. The proposed reforms aim to provide a universal pension framework, extend provident fund and pension benefits to gig and unorganised workers, and modernise the EPFO’s technology infrastructure through a Core Banking Solution (CBS)-enabled platform.
The move comes after the successful implementation of EPFO 2.0, which focused on improving member services through a revamped portal, easier claims settlement, and the consolidation of 123 regional databases into a centralised system. The upgraded platform has enabled faster processing of claims, timely credit of interest, and better visibility of withdrawal-eligible balances for members.
Under EPFO 3.0, the retirement fund body plans to cater to India’s workforce of more than 60 crore people, the majority of whom are employed in the unorganised sector and currently lack formal pension coverage.
A key feature of the proposed reforms is the introduction of a universal pension scheme based on a defined contribution model. Unlike the existing EPFO framework, the new system is expected to accept contributions from multiple sources, including employees, employers, the government, gig work aggregators, CSR funds, NGOs, and even voluntary third-party donors.
Officials said the accumulated contributions will be invested in government-backed securities, with interest credited annually. At retirement, subscribers will have the option to convert their accumulated TRS into either a regular annuity-based pension or opt for a Systematic Withdrawal Plan (SWP), providing greater flexibility in managing retirement income.
The proposed system will also allow members to set personalised retirement goals. Digital dashboards will display real-time information on total contributions, current corpus, and progress toward achieving the desired retirement savings target. Members will be able to modify their retirement goals, with the system automatically recalculating the contribution requirements.
To assist users in planning their retirement, EPFO intends to introduce interactive simulation tools that estimate pension payouts based on variables such as age, retirement age, contribution levels, interest rates, and accumulated savings. Inflation-adjusted projections and comparative scenarios will also be available, enabling subscribers to make informed financial decisions.
Officials indicated that members choosing the systematic withdrawal option will have flexibility in determining their monthly payouts. Those opting for higher withdrawals in the early years of retirement may draw from the principal amount, while lower withdrawals could allow the remaining corpus to continue earning interest, thereby increasing future payouts.
The proposed framework draws inspiration from successful international pension models, particularly Singapore’s Central Provident Fund (CPF) system, which combines retirement savings with provisions for housing and healthcare while allowing contributions from multiple stakeholders.
One of the most significant aspects of EPFO 3.0 is its focus on extending formal social security benefits to gig and platform workers, who have traditionally remained outside the ambit of organised retirement schemes. The EPFO expects around 2.5 crore gig workers and building and other construction workers (BOCW) to be brought under the new system over the next five years.
To accommodate workers associated with multiple employers or digital platforms, the new system proposes a one-to-many Universal Account Number (UAN) structure. This will enable a single UAN to receive contributions from multiple employers and aggregators while maintaining separate records for each source of contribution.
The platform is also expected to support contributions from third parties, including CSR initiatives, donor organisations, charities, and individuals, with transparent tracking of every contribution under the subscriber’s account. Officials said configurable upper limits would be introduced to regulate such contributions.
The reforms also seek to improve retirement security for India’s building and construction workers, a sector with over 3.5 crore registered workers and welfare cess collections exceeding Rs 70,000 crore across various state welfare boards. According to officials, the proposed pension framework could provide a structured mechanism for channeling these resources into sustainable and portable retirement benefits.
Additionally, the scheme proposes introducing family and survivor pension benefits, covering spouses, children, and orphans through a pooled Family Benefit Fund managed on actuarial principles. Subscribers from other provident fund systems, including the General Provident Fund (GPF), may also be allowed to transfer their accumulated balances into the new pension framework.
Another major pillar of EPFO 3.0 is the adoption of a Core Banking Solution (CBS) for its technology platform. The move is aimed at enabling real-time transaction processing and improving scalability as the organisation expands coverage to a significantly larger workforce. Since CBS already serves as the backbone of India’s banking system, officials believe it offers a robust and secure foundation for handling the expected increase in transaction volumes.
The reforms are also aligned with the Code on Social Security, which formally recognises gig and platform workers for social security benefits. Under the Code, digital aggregators are required to contribute between 1 and 2 per cent of their annual turnover, subject to a ceiling of 5 per cent of the amount payable to workers, towards social security funds.
Officials further indicated that the upgraded platform could eventually support innovative payment mechanisms such as split-payment models, allowing a portion of customer payments, voluntary tips, donations, or other digital transactions to be automatically diverted toward workers’ social security contributions.
