Economy Samyak IAS 21 Jul, 2026 3 min read

What EPFO 3.0 will bring: Pension cover for all, social security for gig workers

The Employees’ Provident Fund Organisation (EPFO) is considering EPFO 3.0 reforms to expand pension and social-security coverage.

The proposed reforms aim to provide:

Universal pension coverage for workers.
Social security for gig, platform and unorganised-sector workers.
Flexible retirement withdrawal options.
A technology-driven, Core Banking Solution-enabled platform.

Universal Pension Coverage

Pension coverage may be extended to gig, platform, construction and other unorganised-sector workers.
Workers may choose between a regular annuity-based pension and a Systematic Withdrawal Plan for periodic withdrawal of their retirement corpus.

Target Retirement Sum (TRS)
The Target Retirement Sum is the estimated retirement corpus a worker needs to receive the desired pension after retirement. It will be calculated using factors such as the worker’s present age, expected retirement age, existing savings, desired pension amount, interest rates and annuity rates. Based on this target, the system will determine how much and how frequently the worker must contribute. These contributions will accumulate and earn returns until retirement, similar to provident-fund savings.

Singapore Model

EPFO 3.0 is studying Singapore’s Central Provident Fund (CPF) model.
CPF savings are used for retirement, housing and healthcare.
Contributions are supported by employees, employers, the government and family members.
Employees contribute around 20% of their salary to CPF.
Members aged 55 years and above may earn interest of up to 6%.
Members below 55 years may earn interest of up to 5%.

Inflation-Linked Pension Simulation

Members may decide the amount of pension payout or systematic withdrawal.
Pension projections will be based on age, retirement age, corpus, interest rate, voluntary contributions and contribution frequency.
The system will display the projected retirement corpus, estimated monthly pension and inflation-adjusted pension values.
Comparative graphs will help members assess different contribution and employment scenarios.
Members may increase withdrawals when they need a higher pension.
Higher withdrawals may reduce the principal amount.
Lower withdrawals will allow interest to accumulate in the principal.
Accumulated interest may provide higher pension payouts in later years.
The proposed EPFO model is expected to be more flexible than traditional annuity-based pension schemes.

Important Features of EPFO 3.0

Extends PF and pension coverage to unorganised, gig and platform workers under the Code on Social Security.
Requires aggregators to contribute 1–2% of annual turnover, capped at 5% of payments made to workers.
Introduces a Core Banking Solution to efficiently handle transactions for India’s large workforce.
Enables flexible contributions through self-payment, employer or aggregator contributions, third-party support, donations and tips.
Uses a split-payment mechanism to automatically divert a portion of digital transactions towards workers’ social-security accounts.
Retains the existing EPF and pension structure while creating a more flexible, technology-driven and inclusive social-security system.