EPFO to Open Provident Fund for Gig Workers, Self-Employed: New Self-Funded Model
The Employees' Provident Fund Organisation (EPFO) is developing a framework to extend social security coverage to millions of workers in the unorganised sector, including gig workers, self-employed individuals, and those in exempted establishments. This initiative aims to bring these groups under a universal provident fund scheme, allowing them to contribute a portion of their income voluntarily.
According to an official familiar with the development, the accumulation phase will mirror the existing EPFO model. New subscribers will have the flexibility to contribute daily or annually, with the corpus earning annual interest and enjoying tax benefits similar to those currently available. Annual contributions up to ₹2.5 lakh will be fully exempt from tax, and the interest accrued will also be tax-free.
A significant change is planned for the withdrawal phase. Subscribers may be allowed to retain their corpus with EPFO even after retirement—a facility that could also be extended to existing members. Additionally, new subscribers may have the option to choose a systematic withdrawal plan, giving them flexibility in deciding the payout structure, which could be front-loaded or back-ended. The EPFO has studied models like Singapore's to design this framework.
Unlike the Pradhan Mantri Shram Yogi Maandhan Yojana, where the central government contributes 50% of the pension fund, this new scheme will be entirely self-funded by individuals. No budgetary support is expected.
The move comes as the labour ministry seeks to extend retirement savings beyond the current EPFO net, which covers only establishments with 20 or more workers. Under the implementation of new labour codes, the government has mandated platforms such as taxi aggregators and food delivery apps to register their workers on a portal. If the EPFO scheme is approved, a freelance consultant, for instance, could plan for retirement by contributing to this model.
An official stated, 'The new code on social security provides for the government to ensure that everyone has access to some form of social coverage. The discussions are in the initial phase, and a number of models prevalent across the world are being examined. It will be a self-financing model, with no budgetary support used.'
While the EPFO has not yet received an official mandate, it has floated a tender to design and develop the necessary IT architecture. The proposal is still in early discussions.
