Universal PF Scheme: A new plan is being discussed by the EPFO that could open provident fund savings to people who usually do not get EPF help. This includes workers in the unorganised sector, gig workers, self-employed people and freelance professionals. The idea is to build a Universal Provident Fund Scheme that gives retirement security to more people and not just regular salaried workers. TOI reports that the scheme is being seen as a big step because it may widen social security for millions who are outside the current EPF net.
The proposal is meant to let people put aside part of their income into a provident fund account in a way that is not tied only to a monthly salary. Workers may be able to add money daily, monthly or even yearly, depending on what suits them best. The savings would earn interest from EPFO, much like the current provident fund system. The tax treatment is also expected to stay close to the EPF model, with contributions up to Rs 2.5 lakh a year likely to remain tax free and other EEE benefits continuing too.
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What would Change for Workers?
One of the biggest changes in the new plan is the withdrawal system. Under the proposal, subscribers may be allowed to keep their money with EPFO even after retirement. They may also get a systematic withdrawal option, so they can choose how they want to take out their retirement money later. EPFO has also studied overseas models, including Singapore’s, while shaping the framework. The scheme would be funded fully by the subscribers themselves, and EPFO has already floated a tender for the IT system needed to run it.
The scheme could also help self-employed people who do not have a steady employer-based retirement plan. As TOI notes, “However, a retirement savings mechanism comparable to the Employees’ Provident Fund (EPF) has not yet been in place for these workers,” and that gap is one reason the proposal is being watched closely. For many freelancers, consultants and gig workers, this could become a simple way to save for old age in a trusted system.
Why does it Matters?
Experts say this idea could become one of India’s biggest social security moves in years. The Code on Social Security, 2020 already gives a legal base for support to gig workers, platform workers and self-employed people. A government release says the law brings unorganised, gig and platform workers into a wider social protection framework and creates room for dedicated welfare support.
Kuldip Kumar of Mainstay Tax Advisors LLP said the code provides benefits like life and disability insurance, health and maternity support, old-age protection and accident cover for gig and platform workers. Puneet Gupta of EY India said, “A voluntary provident fund framework could help bridge this gap,” because many workers outside formal jobs still do not have a long-term retirement system like EPF. He also said, “The biggest challenge will be participation and contribution continuity.” Since income can be uneven for gig and self-employed workers, the system will need to stay simple, flexible and easy to use.
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Gupta added that this proposal changes the idea of provident fund from employer-based coverage to individual participation. In his words, “This proposal changes the conversation from employment-based coverage to individual participation,” which is why many experts see it as a possible game changer. Another key point is trust. Kuldip Kumar said stable EPFO returns may attract people who want safety over market swings, because “This could influence retirement savers who prefer greater stability over market volatility,”.
