Under EPFO 3.0, Centre plans pension for gig workers
The central government is drawing up a new universal contributory pension scheme for gig, platform, unorganised and construction sector workers under a broader "EPFO 3.0" reform programme.
The scheme follows a defined-contribution model: savings accumulate over a worker's career, remain invested in long-term government-backed securities, and earn annually credited interest, converting into a pension — termed the "Target Retirement Sum" (TRS) — once the member turns 60.
Funding is designed to be pooled from multiple sources: voluntary worker contributions, employer contributions where applicable, government co-contributions for lower-wage workers, and contributions from aggregators (for gig and platform workers) and CSR/third-party sources.
The design also proposes a pooled "Family Benefit Fund," run on actuarial principles, to provide survivor and family pensions for spouses, children and orphans.
The proposal is at a preliminary, pre-Cabinet stage; the government has reportedly studied retirement-fund models from countries such as Singapore while shaping it.
EPF Act, 1952 and the EPFO's Existing Architecture
The Employees' Provident Funds and Miscellaneous Provisions Act, 1952 is the statutory basis for the Employees' Provident Fund Organisation (EPFO), whose apex decision-making body is the Central Board of Trustees (CBT), chaired by the Union Labour Minister. Under the existing scheme, both employer and employee contribute 12% of basic wages plus dearness allowance; of the employer's 12%, 8.33% is diverted to the Employees' Pension Scheme, 1995 (EPS-95) and the remaining 3.67% to the Provident Fund. EPS-95 pays a monthly pension using the formula (Pensionable Salary × Pensionable Service)/70, subject to a minimum pension, and requires at least 10 years of eligible service, with pension payable from age 58.
Key Details
- Statutory basis: EPF & MP Act, 1952; EPFO administers three schemes — EPF Scheme 1952, EPS 1995, and EDLI (Employees' Deposit Linked Insurance) 1976.
- Standard contribution split: 12% employee + 12% employer; of employer's share, 8.33% goes to EPS-95, 3.67% to EPF.
- EPFO coverage is traditionally restricted to establishments with 20 or more employees in the organised/formal sector — a structural gap that excludes gig and informal workers.
EPFO 3.0 is explicitly designed to extend a pension architecture beyond this 20-employee organised-sector threshold to gig, platform and unorganised workers who fall outside the existing EPF/EPS net, using a new defined-contribution "TRS" mechanism distinct from the EPS-95 formula.
Code on Social Security, 2020 — Gig and Platform Worker Provisions
The Code on Social Security, 2020 was the first Indian labour law to statutorily define "gig worker" and "platform worker" as distinct categories and to create a dedicated social security architecture for them, including a Social Security Fund. It consolidated nine earlier central labour laws (including the EPF & MP Act, 1952, the Employees' State Insurance Act, 1948, and the Maternity Benefit Act, 1961). The Code was passed by Parliament on 23 September 2020 and brought into force on 21 November 2025.
Key Details
- Section 114(4) mandates aggregators (defined to include ride-hailing, food and grocery delivery, and other digital intermediary platforms) to contribute between 1% and 2% of their annual turnover to the Social Security Fund, capped at 5% of the amount paid or payable to gig and platform workers.
- The Fund is meant to finance life and disability insurance, health and maternity benefits, and old-age protection (i.e., pension) for gig/platform workers, administered jointly by central and state governments.
- The Code empowers the central government to frame separate welfare schemes for gig workers, on which the new EPFO 3.0 pension proposal is expected to draw.
EPFO 3.0's proposed aggregator-funded contribution stream for gig workers operationalises the Section 114(4) framework of the 2020 Code, which had created the legal category and funding mechanism but left scheme design — including a pension component — to be notified separately; that design work is what is now underway.
Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM) — the Existing Unorganised-Sector Pension Scheme
PM-SYM, launched in February 2019 by the Ministry of Labour and Employment, is a voluntary, contributory pension scheme already targeted at unorganised-sector workers, offering a fixed minimum monthly pension of Rs 3,000 from age 60. It is administered with the Life Insurance Corporation of India (LIC) and Common Services Centres (CSC).
Key Details
- Eligibility: unorganised workers aged 18–40 with monthly income up to Rs 15,000, not covered under EPF/ESIC/NPS and not an income-taxpayer.
- Structure: matching 1:1 government contribution; monthly worker contribution ranges from Rs 55 to Rs 200 depending on entry age, up to age 60.
- Fixed benefit (Rs 3,000/month) contrasts with EPFO 3.0's proposed defined-contribution, dynamically computed "Target Retirement Sum."
EPFO 3.0 would sit alongside (and could eventually subsume or complement) PM-SYM, but differs structurally — moving from a fixed guaranteed pension to a market-linked, defined-contribution corpus that converts into an annuity or systematic withdrawal plan at retirement, a design choice explicitly referencing international models such as Singapore's Central Provident Fund.
- EPFO 3.0's pension for gig/unorganised workers converts accumulated savings into a "Target Retirement Sum" (TRS) at age 60, computed dynamically from the annuity/interest rates prevailing at that time.
- At age 55, a worker may choose the retirement-savings purpose; before that, the account accumulates like a provident fund.
- Code on Social Security, 2020 aggregator contribution: 1–2% of annual turnover, capped at 5% of amounts paid to gig/platform workers (Section 114(4)); Code in force since 21 November 2025.
- PM-SYM (comparator scheme): Rs 3,000/month fixed pension from age 60; 1:1 government-matched contribution of Rs 55–200/month; launched February 2019.
- The EPFO 3.0 gig-worker pension proposal is at a preliminary policy stage and has not yet received formal government/Cabinet approval.