The Employees’ Provident Fund Organisation is not able to provide a minimum pension of ₹3,000 per month given the low contribution to the Pension Fund Scheme the Provident Fund Scheme. Under EPF, an employee pays 12 percent of his basic wage and some allowances as statutory deductions. A matching amount is contributed by the employer, out of which 8.33 percent goes to EPS.
Thus, the executives at EPFO may consider the possibility of setting up a universal pension scheme at its upcoming meeting on July 8 in Bengaluru, for those who are not yet covered by the existing retirement fund.
This separate scheme would provide provident fund and retirement benefits to independent workers such as those engaged in gig or platform work.
In 2020, Parliament passed new labour codes that stated that the government would create a new social security scheme protecting gig and platform workers. An internal committee of the EPFO had made a case for the introduction of a universal pension scheme given Prime Minister Narendra Modi’s call to provide universal social security catering to those not covered under the Employee Pension Scheme, 1995.
A report by the public policy think tank, NITI Aayog, titled ‘India’s Booming Gig and Platform Economy’ released last week made certain recommendations for the protection of gig and platform workers. These included policies regarding age/retirement plans for gig and platform workers as well as insurance covers for contingencies. Such policies may be uniquely designed by a firm, in partnership with insurance companies, or could be designed and offered in collaboration with the government, as envisaged under the Code of Social Security, 2020.
The informal sector in India is disproportionately large; a resounding 83 percent of workers are engaged in work in the unorganised sector that lacks formal employer-employee relationships and leads to many people falling into debt traps.
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