EPFO universal PF scheme may cover self-employed, gig and unorganised workers
For years, the Employees’ Provident Fund (EPF) has largely been linked to salaried jobs in the organised sector. But what if you’re a freelancer, a gig worker, a shop owner or someone who works for yourself? You may soon be able to save for retirement through the same system.
The Employees’ Provident Fund Organisation (EPFO) is working on a framework that could allow self-employed individuals, gig workers, people employed in the unorganised sector and workers in exempted establishments to voluntarily contribute to a universal provident fund scheme, reported The Times of India. If the proposal goes ahead, millions who are currently outside the EPF network could finally get access to a structured retirement savings plan.
The proposal is still in its early stages, but if it gets the green light, it could bring social security benefits to millions of workers who are currently outside the EPF system.
WHO COULD BENEFIT?
At present, EPF mainly covers employees working in establishments with 20 or more workers. This leaves a large section of India’s workforce outside the social security system.
The proposed scheme aims to include self-employed professionals, freelancers and consultants, gig workers, including delivery partners and cab drivers, workers in the unorganised sector, and employees of exempted establishments who are not part of the regular EPFO framework.
The idea is to give these workers an opportunity to build retirement savings through a voluntary provident fund account.
FLEXIBLE CONTRIBUTIONS
Unlike the existing EPF system, where employers and employees make monthly contributions, the proposed scheme is expected to offer much greater flexibility.
Subscribers may be able to contribute as often as they like, daily, monthly or even once a year, depending on their income and financial situation.
This could make the scheme more practical for people whose earnings are irregular, such as freelancers or gig workers.
TAX BENEFITS
The accumulation phase of the proposed scheme is expected to work on lines similar to the existing EPF model.
According to officials, annual contributions of up to Rs 2.5 lakh could enjoy full tax exemption. The interest earned on these contributions is also expected to remain tax-free, similar to the present EPF rules.
This means subscribers could build a retirement corpus while also benefiting from tax savings.
ENTIRELY SELF-FUNDED
Unlike the Pradhan Mantri Shram Yogi Maandhan Yojana, where the Central government contributes half of the pension contribution, the proposed EPFO scheme will not receive any financial support from the government, mentioned the report.
Subscribers will build their retirement corpus entirely through their own contributions.
WORK ON THE FRAMEWORK HAS BEGUN
Although the government has not yet formally approved the proposal, EPFO has already floated a tender to develop the IT infrastructure needed to support the scheme.
The proposal also fits with the implementation of the new labour codes, under which online platforms such as food delivery companies and taxi aggregators have been asked to register their workers. If the scheme is introduced, these workers, along with freelancers and self-employed professionals, could finally have access to a formal retirement savings platform.
WHAT HAPPENS NEXT?
The proposal is still at an early stage, and officials say several international models are being examined before the final framework is prepared.
If implemented, the proposal could significantly expand India’s social security system by giving millions of self-employed individuals and workers in the unorganised sector an opportunity to save for retirement through a trusted and structured provident fund mechanism.
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