EPFO 3.0 Ushers in a Citizen-Centric, Tech-Enabled Social Security Architecture

Why in News ?

The Employees’ Provident Fund Organisation (EPFO), India’s premier retirement fund body, is undertaking a new phase of digital and institutional reforms under EPFO 3.0. These reforms aim to simplify access, enhance portability, and prepare the institution for expanded social security coverage under the Labour Codes.

EPFO is in the final stages of floating a tender for IT platform implementation and has shortlisted firms such as Wipro, Infosys, and TCS. Meanwhile, EPFO 2.0 is nearing completion, with only pension, claim, and annual accounts modules pending.

Background: Understanding EPFO and Its Role

Nature of the body: EPFO is a statutory organisation under the Ministry of Labour and Employment, established in 1952 to provide social security to the organised workforce.

Functions: It administers three major schemes:

• Employees’ Provident Fund (EPF), 1952 – retirement savings,
• Employees’ Pension Scheme (EPS), 1995 – post-retirement pension,
• Employees’ Deposit Linked Insurance (EDLI), 1976 – insurance cover for employees.

Scale and coverage:

• Nearly 8 crore active members,
• Manages a corpus of around ₹28 lakh crore,
• Coverage is mandatory for establishments with 20 or more employees, now extending across sectors under the Social Security Code.

With growing labour mobility, digitisation, and expansion of social security to new categories of workers, EPFO’s legacy systems have increasingly required structural and technological upgrades—prompting reforms under EPFO 2.0 and now EPFO 3.0.

EPFO 3.0 – Key Reforms Proposed

1. Centralised Core Banking Solution

• Introduction of a nationwide, centralised system similar to banking operations.
• Members can access accounts and resolve grievances at any EPFO office across India.
• Enhances portability for migrant and inter-State workers.
• Replaces fragmented, regionalised databases with a single unified platform.

2. New User-Friendly Digital Portal

• Revamped EPFO website with improved navigation and simplified interfaces.
• Integration of AI-backed language translation tools using BHASHINI (a MeitY initiative).
• Enables access in vernacular languages, promoting inclusivity and reducing language barriers for workers across regions.

3. Preparation for Labour Codes Implementation

• EPFO is likely to administer social security funds for unorganised workers.
• A separate fund is envisaged for gig and platform workers, aligning with provisions of the Social Security Code.
• This reform anticipates a significant expansion in the scale, scope, and diversity of EPFO’s beneficiary base.

EPFO 2.0 – Ongoing and Completed Reforms

1. Liberalisation of Withdrawal Norms

• Withdrawal categories streamlined from 13 to 3:
  • Essential needs (illness, education, marriage),
  • Housing needs,
  • Special circumstances.
• Minimum unemployment period for premature final settlement increased from 2 months to 12 months, discouraging premature depletion of retirement savings.

2. UPI-Linked Withdrawal Facility

• Members can withdraw funds using the BHIM UPI app.
• Separate display of:
  • Total balance,
  • Balance eligible for withdrawal,
  • Minimum mandatory 25% balance.
• Initial transaction cap proposed at ₹25,000 per withdrawal, balancing ease of access with financial prudence.

3. Self-Correction of Personal Details

• Members can correct personal details without employer or EPFO approval, including:
  • Name, date of birth, gender, marital status,
  • Dates of joining and leaving.
• For UANs issued before 1 October 2017, employers can make corrections without EPFO approval.
• Impact: About 32.23 lakh profile corrections completed till December 2025, significantly reducing grievance pendency and processing time.

Challenges and Way Forward

1. Managing Scale Expansion

• Inclusion of unorganised, gig, and platform workers will dramatically increase membership.
• Leveraging Digital Public Infrastructure (DPI) such as UPI and BHASHINI will be essential for scalable service delivery.

2. Ensuring Data Security and Cyber Resilience

• Centralised systems heighten risks of cyber threats and data breaches.
• Requires robust:
  • Cybersecurity architecture,
  • Data protection frameworks,
  • Phased implementation with strong IT governance.

3. Addressing Digital Literacy Gaps

• Many workers, especially in informal sectors, face low digital literacy.
• Capacity-building of EPFO staff and awareness campaigns among beneficiaries are critical.

4. Smooth Transition from Legacy Systems

• Migration from decentralised legacy systems to a centralised core banking platform must be seamless.
• Requires coordination with States and other stakeholders for effective rollout of Labour Codes.