​Arbitrary and opaque: on the Employees’ Pension Scheme 2026

​

The manner in which the Employees’ Provident Fund Organisation (EPFO)’s Central Board of Trustees (CBT) approved the Employees’ Pension Scheme (EPS) 2026, on March 2, replacing the EPS 1995 scheme, has raised serious transparency concerns. This affects approximately 5.4 crore contributing members and 82 lakh pensioners. Although the EPS and the Employees’ Provident Fund and Employees’ Deposit-Linked Insurance Schemes were designed as a corollary to the Code on Social Security, 2020 — which was abruptly notified in November 2025 along with three other Codes — neither the government nor the Labour Ministry had, until now, given any hint of the new schemes. The stakeholders were not consulted by the authorities. More than any other scheme, the EPS 1995, has over the past decade, dominated headlines due to litigation in various courts, including the Supreme Court of India. Over the past 12 years, certain features of the scheme were altered, to the detriment of employees. For instance, coverage of the Pension Scheme was limited to those earning up to ₹15,000 a month, instead of offering universal coverage as originally intended. The pensionable salary calculation changed from the average pay in the last 12 months to 60 months, substantially reducing the amount of eligible pension. The unrestricted option for pension on a higher pension was limited to those who had exercised the option within a year of the modified scheme that came into force on September 1, 2014. With the Supreme Court’s intervention in 2022, the higher pension option was extended to post-2014 retirees as a special case. Unfortunately, pre-2014 retirees were left in the lurch as the unrealistic conditions set by the PF body made most of them ineligible for higher pension.

In the new Pension Scheme approved by the CBT, the option provision has been removed as it is considered ‘obsolete’ for reflecting a narrow legal interpretation. Moreover, those hoping for an upward revision of the ₹15,000 PF contribution ceiling are disappointed, as no such indication has been given so far. Both the wage ceiling and the minimum pension of ₹1,000 were fixed over 11 years ago. The EPFO’s overall approach seems to be aimed at reducing what authorities describe as the burden of pension commitment. With greater government funding and higher contributions from employers and willing employees, the EPFO can well meet pension challenges. A positive mindset along with empathy for pensioners and contributors is what is needed from the Union government and EPFO. A mere change of laws, regulations and procedures will not deliver the results desired by crores of members and lakhs of pensioners.