Labour Ministry Plans Universal, Flexible EPFO Pension Scheme

The Ministry of Labour and Employment is working on a proposal for a new pension scheme that could be made available to all workers, regardless of whether they are employed in the formal or informal sector, as per the news report.  

The scheme is proposed to be managed by the Employees' Provident Fund Organisation (EPFO) and would function separately from existing government pension products. 

No Fixed Contribution Requirement 

Unlike many pension schemes that require regular monthly or yearly deposits, the proposed plan would allow subscribers to contribute whenever they have available funds.  

There would be no fixed contribution amount or schedule. The proposal is for workers with uneven incomes, who may not be able to make periodic payments throughout the year. 

Account and Payout Structure 

Under the plan, every subscriber would receive a unique account number linked to the pension account, allowing contributions to continue even after changing jobs or leaving employment. The account would remain active even if contributions stop for long periods.  

Reports citing officials have indicated that returns may be linked to the annual interest rate announced for EPF deposits. The government is also considering different withdrawal options after the age of 60.  

Subscribers may be allowed to take part of the accumulated amount as a lump sum, while the remaining balance could be paid through an annuity over a fixed period such as 10 or 15 years.  

A framework may also be introduced to limit full withdrawal of the corpus. 

Existing Schemes to Continue 

The proposed scheme is to operate alongside the Employees' Pension Scheme (EPS), National Pension System (NPS), Atal Pension Yojana (APY), Employees' Provident Fund (EPF) and Employees' Deposit Linked Insurance (EDLI).  

Officials said enrolment would be separate, with subscribers making direct contributions through their individual accounts. 

Read More: SIP Calculator: How Investing ₹16,000 Per Month Can Grow to ₹3.04 Crore in 25 Years! 

Conclusion 

The proposed pension scheme is under consideration by the Labour Ministry and details are yet to be finalised. If approved, it would operate alongside existing pension programmes administered by different agencies. 

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