EPFO Reform (Governance, Public Administration & Ethics)
EPFO Reform (Governance, Public Administration & Ethics)
Why In News:
The government is working on a new pension architecture, referred to as EPFO 3.0, aimed at extending retirement security to gig, unorganised and construction sector workers who currently have little or no access to pension benefits.
Source: The Indian Express, Page 1, 18 July 2026, 'EPFO reform: Govt works on new pension plan for all'
Why a New Pension Plan is Needed
Coverage gap: India has around 55 crore workers, of whom nearly 41.8 crore, or about 76 percent, work in the unorganised sector with little or no formal pension coverage.
Target Retirement Sum model: The proposed EPFO 3.0 framework for gig and unorganised workers envisages contributions accumulating until age 60, which then convert into a pension through a Target Retirement Sum model.
What Has Already Changed under EPS 2026
New framework: The Employees' Pension Scheme (EPS), 2026 has been notified under the Code on Social Security, 2020.
Faster claim settlement: EPFO must now settle a complete pension claim within 20 days or flag any deficiency within the same period; unexplained delays attract 12 percent annual interest, recoverable from the responsible official's salary.
Early pension: Members can opt for early pension from age 50 after completing 10 years of service, with a 4 percent reduction in pension for every year before the normal retirement age.
Key Facts for Prelims
EPFO: Employees' Provident Fund Organisation, a statutory body under the Ministry of Labour and Employment that administers the EPF, EPS, and Employees' Deposit Linked Insurance (EDLI) schemes.
The EPFO follows a tripartite administrative structure, ensuring representation of the government, employers, and employees.
It is governed by the Central Board of Trustees (CBT), the apex decision-making body under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
The CBT includes members from the Central Government, State Governments, employers, and employees, ensuring balanced and inclusive decision-making.
The board is chaired by the Union Minister of Labour and Employment.