The Central Government is working on a proposed Universal Pension Scheme under the EPFO 3.0 reform agenda to expand retirement security for millions of workers across India. The proposed contributory pension model is designed to cover employees in the organised sector, gig workers, platform workers and informal sector workers through a flexible retirement savings framework.
The proposed scheme is based on the concept of a Target Retirement Sum (TRS), allowing subscribers to build an individual retirement corpus instead of relying on a fixed pension amount. According to the proposal, each subscriber will maintain a dedicated pension account where retirement savings will grow through regular contributions and annual interest.
Under the proposed framework, members will be able to choose their desired retirement corpus based on their retirement age, expected post-retirement income and contribution capacity. EPFO’s digital platform is expected to calculate the required monthly contributions, monitor savings progress and allow subscribers to revise their retirement goals whenever necessary.
One of the major features of the proposal is its flexible contribution system. Contributions may come from employees, employers, government co-contributions for eligible low-income workers, gig economy aggregators, Corporate Social Responsibility (CSR) initiatives, non-government organisations and other approved contributors. The proposal aims to improve retirement savings for workers with irregular income patterns.
At retirement, subscribers may either convert their accumulated corpus into a regular annuity or opt for a Systematic Withdrawal Plan (SWP), providing greater flexibility than traditional pension models. The proposed system will also include retirement planning tools offering inflation-adjusted projections based on age, contribution frequency, investment returns and retirement goals.
The government also proposes extending social security coverage to gig workers, platform workers, construction workers, informal sector employees and workers currently outside the Employees’ Pension Scheme (EPS). A one-to-many Universal Account Number (UAN) mapping is also being planned to enable workers with multiple employers or digital platforms to maintain a single retirement account while recording separate contributions.
The proposal further includes a Family Benefit Fund to provide survivor benefits for spouses, children and eligible dependents. If implemented, the scheme is expected to strengthen India’s social security system by expanding pension coverage, encouraging long-term retirement savings and supporting the implementation of the Code on Social Security, 2020.
The proposed Universal Pension Scheme is currently under development as part of the EPFO 3.0 reforms. The government has not yet announced the implementation date or final operational guidelines.
