What EPFO 3.0 proposes: Pension cover for all, social security for gig workers, Pg14

Key Highlights:

• The Employees’ Provident Fund Organisation (EPFO) is proposing EPFO 3.0 reforms to introduce a universal pension cover for all workers.
• This initiative aims to extend social security benefits for the first time to unorganised sector, gig, and platform workers.
• A key component is the upgradation of the tech ecosystem to a Centralised Banking Solution (CBS) for efficient management of contributions.
• Workers will have the flexibility to choose between an annuity or a systematic withdrawal plan at the time of retirement.

Detailed Insights:

• The new pension cover will operate under a defined contribution framework, drawing funds from multiple sources.
• Contributions are envisioned from workers, employers, government co-contributions, aggregators for gig workers, and Corporate Social Responsibility (CSR) funds.
• Accumulated contributions will be invested in government-backed securities, with annual interest credited to members' accounts.
• A Target Retirement Sum (TRS) will be dynamically calculated based on the member's chosen pension goal and expected retirement age.
• The system will provide inflation-adjusted projections and allow members to simulate various pension scenarios.
• For gig and platform workers, a single Universal Account Number (UAN) will track contributions from multiple employers or aggregators.
• The reforms also propose family and survivor pensions for dependents, funded through a pooled Family Benefit Fund.
• These changes are in line with the Code on Social Security, which mandates social security provisions for gig and platform workers.

Key Concepts Involved:

• Employees’ Provident Fund Organisation (EPFO): A statutory body under the Ministry of Labour and Employment, providing social security benefits.
• Centralised Banking Solution (CBS): A software system that enables real-time banking operations and transactions across all branches.
• Universal Account Number (UAN): A 12-digit number allotted to an employee, which remains constant throughout their employment history.
• Code on Social Security: One of the four labour codes in India, consolidating and amending laws related to social security.