Government modernises India's retirement savings framework under the Social Security Code, but key benefits including PF contributions, pension formula, withdrawals and interest structure remain unchanged for employees.

The Central Government has officially notified the Employees' Provident Funds (EPF) Scheme, 2026 and the Employees' Pension Scheme (EPS), 2026, replacing the long-standing provident fund and pension frameworks with a new legal structure under the Code on Social Security, 2020. While the announcement marks a major reform in India's labour and social security laws, it does not significantly alter the retirement benefits available to millions of salaried employees.

For EPF subscribers, the new framework primarily focuses on improving governance, digitalisation, compliance, and transparency rather than changing contribution rates, withdrawal rules, pension calculations, or accumulated savings. Existing EPF accounts, Universal Account Numbers (UANs), balances, nominations, and benefits will continue without interruption.

The notification aims to simplify administration while creating a more efficient and technology-driven social security ecosystem.

EPF Framework Moves Under the Social Security Code

The most significant change introduced through the notification is the migration of the EPF system from the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 to the Code on Social Security, 2020.

This represents a legal and administrative restructuring rather than a financial overhaul.

Employees do not need to open new PF accounts or transfer their existing balances. All accumulated savings, contribution histories, employer records, and Universal Account Numbers remain valid under the new framework.

The transition is intended to consolidate multiple labour laws into a unified social security system, making administration simpler and more transparent.

No Change in PF Contributions

One of the biggest concerns among employees has been whether monthly EPF deductions would change.

The answer is no.

The contribution structure remains exactly as before:

• Employees will continue contributing 12% of Basic Salary plus Dearness Allowance.

• Employers will continue contributing an equal amount.

• Eligible establishments can continue contributing at the notified 10% rate where applicable.

• Employees can continue making voluntary higher contributions through the Voluntary Provident Fund (VPF).

The notification does not introduce any increase or reduction in mandatory monthly contributions.

Interest Rate and Withdrawal Rules Continue

The government has also left the existing EPF interest rate mechanism unchanged.

Interest on provident fund balances will continue to be declared annually by the EPFO based on recommendations from its Central Board of Trustees.

Similarly, subscribers can continue using existing withdrawal facilities, including:

• Retirement withdrawals.

• Partial withdrawals for housing.

• Medical emergencies.

• Higher education.

• Marriage expenses.

• Unemployment-related withdrawals.

• Online transfer of PF accounts while changing jobs.

Nomination facilities and tax treatment of eligible withdrawals also remain unchanged.

Digital EPFO Services Get Greater Recognition

The EPF Scheme, 2026 formally incorporates several digital initiatives that EPFO has gradually implemented over recent years.

The updated framework strengthens:

• Online employer compliance.

• Electronic maintenance of member records.

• Digital annual statements.

• Online claim processing.

• Electronic inspections.

• Paperless communication.

• Digital account management.

For subscribers, these changes are expected to reduce paperwork while improving service efficiency and claim processing times.

Stronger Governance for Exempted PF Trusts

Companies that manage their own provident fund trusts instead of depositing funds directly with EPFO will now operate under tighter regulatory oversight.

The revised rules introduce enhanced governance standards covering:

• Trustee eligibility.

• Regular trustee meetings.

• Digital accounting systems.

• Annual audits.

• Investment reporting.

• Online disclosures.

• Compliance monitoring.

• Penalties for delayed reporting.

These measures aim to improve transparency and strengthen the protection of employee retirement savings managed by exempted establishments.

Government Gets Emergency Flexibility

The new framework also empowers the Central Government to temporarily reduce or defer EPF contributions during extraordinary situations such as:

• Pandemics.

• Epidemics.

• National disasters.

• Similar emergencies.

However, such modifications can only remain effective for a maximum period of three months and do not permanently change the contribution structure.

The provision is intended to provide policy flexibility during exceptional economic circumstances.

EPS 2026 Replaces Earlier Pension Framework

Along with the new EPF rules, the government has also notified the Employees' Pension Scheme (EPS), 2026, replacing the earlier pension framework while bringing it under the Social Security Code.

Importantly, existing pensioners and current EPS subscribers will continue receiving benefits without interruption.

The transition does not affect already approved pension entitlements.

Pension Formula Remains Unchanged

Employees covered under EPS will continue using the existing pension calculation methodology.

The formula remains:

Monthly Pension = Pensionable Salary × Pensionable Service ÷ 70

The pensionable salary will continue to be calculated using the average salary earned during the last 60 months before retirement or exit.

No changes have been made to pension eligibility or calculation methodology.

EPS Contribution Structure Continues

The contribution pattern under the pension scheme also remains unchanged.

Current provisions continue:

• Employer contribution towards EPS: 8.33%, subject to the wage ceiling.

• Government contribution: 1.16%, subject to applicable limits.

The new framework also formally incorporates provisions applicable to employees who opted for a higher pension following the Supreme Court's landmark judgment.

Faster Pension Processing Introduced

One of the most significant operational improvements under EPS 2026 relates to pension claim settlement timelines.

Under the new framework:

• EPFO must process complete pension claims within 20 days, or

• Notify applicants about deficiencies within the same period.

If claims are delayed without valid justification, interest at 12% per annum becomes payable on the delayed benefit amount.

The interest will be recovered from the salary of the responsible EPFO official, introducing greater accountability within the pension administration process.

What Employees Need to Know

For most salaried employees, there is no immediate financial impact from the notification.

Employees will continue to enjoy:

• Existing EPF balances.

• Same monthly contributions.

• Unchanged interest framework.

• Existing withdrawal facilities.

• Same pension calculation formula.

• Existing retirement eligibility rules.

• Continued tax benefits.

The reforms are primarily aimed at making EPFO more digitally efficient, transparent, and administratively streamlined.

Outlook

The notification of the EPF Scheme, 2026 and Employees' Pension Scheme, 2026 represents a major legal and administrative milestone in India's labour reforms by integrating retirement savings under the Code on Social Security, 2020. While the underlying legal framework has been modernised, the financial benefits that matter most to employees—including provident fund contributions, pension eligibility, withdrawal rules, interest calculations, and accumulated retirement savings—remain unchanged.

For subscribers, the biggest advantages are expected to come through improved digital services, stronger governance, faster claim settlements, and greater transparency rather than changes in retirement benefits. As EPFO continues its digital transformation, employees can expect a more efficient, technology-driven, and user-friendly retirement savings system while retaining the core protections that have long formed the foundation of India's social security framework.