EPFO’s recent changes signal continuity, not radical reform

ECONOMY – POLICY

6 JULY 2026

• The Union Labour and Employment Ministry’s notification of fresh rules for the Employees’ Provident Fund (EPF), Employees’ Pension Scheme (EPS), and Employees’ Deposit Linked Insurance (EDLI) is a procedural formality following the enforcement of the Code on Social Security, 2020, since November 2025.
• Four months ago, the Central Board of Trustees (CBT) of the Employees’ Provident Fund Organisation (EPFO) approved the implementation of social security measures framed as a sequel to the Code that subsumes nine laws, including the Employees’ State Insurance Act, 1948, and the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
• With around eight crore subscribers, changes to the PF legal framework have wide implications for members and their families.
• Even the feature of PF contributions being made voluntary in excess of the statutory wage ceiling of ₹15,000 is not new.
• The practice of allowing contributions up to 12% of the basic pay, regardless of the wage ceiling, was the norm till the COVID-19 pandemic hit. It was only then that many establishments, while experiencing the shortage of funds, had begun limiting their contributions to the wage ceiling.
• However, pensioners and members had hoped that the notification would revise the minimum monthly pension of ₹1,000 and the monthly wage ceiling for contribution to the PF beyond ₹15,000, both of which were determined 12 years ago. But they have been left disappointed.
• According to the EPFO’s 2024-25 annual report, about 36.8 lakh of its 81.5 lakh pensioners receive a monthly pension of ₹1,000 or less.
• Even if financial implications are a concern, the government’s grant-in-aid for the minimum pension, benefiting about 20.6 lakh pensioners, is only around ₹1,000 crore annually.
• Of the government’s outlay of ₹11,000-odd crore towards the EPS for the current year, most of its provision goes for the component of its contribution at 1.16% of the monthly pay (limited to the wage ceiling of ₹15,000) of EPS members.
• The government should restore the applicability of the EPS to all workers, regardless of pay.
• If the government feels that the EPFO is getting overburdened with its work, it can formulate a tailored scheme with the Pension Fund Regulatory and Development Authority of India (PFRDAI).