Govt's New Pension Plan For Gig Workers Under EPFO 3.0: All You Need To Know

India has around 55 crore workers. Of these, nearly 41.8 crore, or 76%, work in the unorganised sector. Most of them have little or no access to pension benefits. To fix this gap, the government is working on a new contributory pension scheme that would bring gig workers, unorganised sector employees, construction workers and even higher-wage employees under a retirement safety net, according to The Indian Express.

This scheme is part of a larger reform push called EPFO 3.0, led by the Employees' Provident Fund Organisation (EPFO). The goal is to cover workers who are currently left out of the Employees' Pension Scheme (EPS), which today only applies to a limited section of the formal workforce.

What Does EPFO Currently Do?

EPFO runs three main social security schemes in India.

The first is the Employees' Provident Fund (EPF) Scheme, introduced in 1952. This is a mandatory savings scheme where both employer and employee contribute 12% of the employee's basic pay plus dearness allowance. The money earns interest set by the government each year and partial withdrawals are allowed for specific needs such as marriage, education or buying a house.

The second is the Employees' Pension Scheme (EPS), introduced in 1995. Out of the employer's 12% contribution, 8.33%, up to a fixed wage ceiling, goes into this pension fund. It is meant to provide a pension after retirement, along with pension support for widows, widowers and people with disabilities.

The third is the Employees' Deposit Linked Insurance (EDLI) Scheme, which dates back to 1976. This is an insurance cover linked to a person's EPF account. The employer contributes 0.5% of wages toward it. If an employee dies while still working, their nominees get a lump sum payment based on the average balance in the account.

Apart from these three, EPFO also runs the Employment-Linked Incentive (ELI) scheme, also called PMVBRY. This scheme is meant to encourage companies to create more jobs. First-time employees who register with EPFO get a government incentive of up to ₹15,000, paid directly into their Aadhaar-linked bank account in two instalments. Employers, too, get wage subsidies if they generate additional, sustained employment.

In recent years, EPFO has also centralised its technology systems. This has allowed faster processing, including auto-settlement of advance claims up to ₹5 lakh, and quicker annual interest credits for members.

So What Is New About This Pension Scheme?

The new scheme being planned is a contributory one. This means contributions from workers will accumulate over time. This money will stay invested in long-term, government-backed securities and other approved instruments and interest will be credited every year.

The report cited officials who described a concept called the "Target Retirement Sum," or TRS. Once a worker turns 60, whatever amount has built up in their account, the TRS, would convert into a pension, calculated using prevailing annuity and interest rates at that time.

"Under the proposed scheme, at the age of 55 years, a worker can decide the purpose for retirement savings. Till that time, it will operate like PF, you keep on accumulating. At that stage when you are retiring, it converts into an annuity or a systematic withdrawal plan," one of the officials cited by the publication, explained.

Each member is expected to get their own individual pension account on EPFO's digital platform. This account will calculate the TRS based on what pension goal the member has chosen and when they plan to retire.

Members will also get personalised dashboards, where they can track their total contributions, see their real-time savings and check how close they are to reaching their target. If someone wants to change their target later, they can and the system will simply recalculate how much they need to contribute going forward. The platform is also designed to accept money from different sources, whether from the member themselves, their employer, or a third party, and sort these contributions accordingly.

How Is This Different From The NPS?

A natural question is how this compares to the National Pension System (NPS), which many people are already familiar with.

The two are quite different.

NPS is purely annuity based, meaning the payout structure is fixed once you retire. This new scheme, on the other hand, is designed to be more flexible and is based on actual returns, not assumed or notional ones.

A source cited by The Indian Express compared it to how a provident fund works, except that contributions stop once you retire. After that, a systematic withdrawal plan kicks in, based on how much monthly pension the member wants.

To put it in numbers, the source gave an example: "If 8% interest is declared and that 8% over ₹1 crore is translating to ₹8 lakh, so you divide it by 12 and that becomes your pension payout every month."

Members will also have the option to withdraw more in the initial years by dipping into their principal amount, depending on how long they expect to live after retirement.

The EPFO 3.0 system is expected to let users run simulations of their expected pension, based on factors like their age, how much they've saved, the interest rate and when they plan to retire.

There will also be an option for inflation-adjusted projections. Members will be able to see their estimated monthly pension, how much their corpus will likely be at retirement, and compare different scenarios side by side, accounting for changes in income and job history over the years.

Who Will Contribute To This Fund?

The scheme is built on what is called a defined contribution framework. Simply put, this means money can come in from several sources: the workers themselves, their employers, government support for lower-wage workers, aggregator companies in the case of gig and platform workers and even corporate social responsibility or third-party funds.

This part is closely tied to India's Code on Social Security, 2020, which for the first time brought gig and platform workers under a social security umbrella. Under this law, aggregator companies, meaning platforms that engage gig workers, must contribute between 1 and 2% of their annual turnover, though this cannot exceed 5% of what they actually pay these workers.

An official said the new pension scheme is meant to put this rule into practice in a flexible way. "The new pension initiative would operationalise this through flexible co-contribution models, ensuring that delivery partners, drivers and other platform workers are systematically included," the official reportedly said.

The scheme is also expected to cover construction workers. India currently has more than 3.5 crore registered construction workers under various state welfare boards. Together, these boards have collected over ₹70,000 crore through cess funds. Officials say the new scheme would use this money to build structured and portable pension benefits for this group of workers.

There is also a plan for family pensions. Spouses, children, and orphans of members would be covered through a pooled "Family Benefit Fund," which will be managed based on actuarial principles. Additionally, members who already have EPF, GPF, or other provident fund balances may be allowed to transfer these into the new scheme.

This pension scheme is only one part of a wider set of changes under EPFO 3.0. The reform will also bring in new technology features and shift EPFO's systems to a core banking model. International retirement models, including Singapore's, are reportedly being studied to help design the Indian scheme.

However, one key detail is still missing. The Ministry of Labour and Employment has not yet decided which agency will actually implement this wider social security coverage for gig and unorganised workers, even though the scheme is expected to run on EPFO's digital systems.

The Bigger Picture: Why Gig Workers Need This?

The Code on Social Security is being described as a landmark step because it recognises gig workers for the first time in Indian law. But the way it has been designed leaves several gaps. Welfare provisions under the law are discretionary, not guaranteed. Access is also tied to rigid engagement conditions, and issues such as algorithmic bias and harassment faced by women workers are not directly addressed.

According to the Economic Survey 2025-26, non-agricultural gig work in India could grow to 6.7% of the country's total workforce by 2029-30. The government has pointed to the e-Shram portal, a database that registers informal and gig workers, as evidence of progress toward formalising this sector. However, registration on e-Shram does not by itself guarantee any welfare benefit.

The Code on Social Security came into force in November 2025. It requires platforms to contribute 1 to 2% of their annual turnover to a Social Security Fund, which is meant to cover life and disability insurance, accident cover, and health and maternity benefits. But draft rules say a worker must complete at least 90 days of work with a single platform in a year, or 120 days across multiple platforms, to qualify for these benefits.

Beyond social security, gig and unorganised sector workers face several other problems. Many face income that changes daily depending on how much work a platform gives them. Reports suggest a large share of gig workers earn below ₹15,000 a month, leaving them with little financial cushion. Unlike formal employees, they usually do not get employer-provided health insurance or retirement savings, which makes them vulnerable during illness or emergencies.

Workers also often have no visibility into how platform algorithms decide their work allocation, ratings, or pay. There is usually no clear way to challenge sudden account suspensions or pay deductions. Because they are legally treated as independent contractors and not employees, forming unions or negotiating collectively is also difficult for them.

Recent Protests Highlight The Problem

These frustrations spilled onto the streets in Noida in April 2026. Tens of thousands of industrial and allied workers held protests across areas including Sector 84, Phase 2, and Sector 62, demanding higher wages, bonuses, and weekly offs. The protests turned into clashes with the police, including incidents of stone-pelting. Police used lathicharges and tear gas to control the crowds and arrested close to 350 people, some of whom were delivery and gig workers caught up in the action, as per media reports.

Separately, on April 15, 2026, around 40 women gig workers linked to Urban Company gathered outside a training facility in Sector 60. Their demands were different from the industrial workers. They asked for fixed eight-hour shifts, mandatory weekly offs, longer gaps between appointments and access to basic washroom and sanitary facilities while on duty.

It is to be noted that advocacy groups and labour unions continue to push for platforms to contribute more meaningfully to worker welfare funds and for governments to enforce clear rights for informal workers.

Proportionate social security, more transparency around how algorithms function and a single national registration system could help close the gap between what the law promises and what workers actually receive, reports suggest.