Ministry Of Labour & Employment Operationalises The Code Of Social Security: A New Compliance Framework For Provident Fund, Pension And Insurance Schemes

I. INTRODUCTION

The Ministry of Labour & Employment, vide Official Gazette dated 29 June 2026 notified three statutory social security schemes under the Code on Social Security, 2020 (“CoSS”) marking a significant step towards operationalising Chapter III the Code. The new scheme is effective throughout the country from the date of its publication.

The newly approved Employees’ Provident Funds Scheme, 2026¹, the Employees’ Pension Scheme, 2026², and the Employees’ Deposit-Linked Insurance Scheme, 2026³ supersede the Employees’ Provident Funds Scheme, 1952, the Employees’ Pension Scheme, 1995, and the Employees’ Deposit-Linked Insurance Scheme, 1976, respectively, and provide a legally robust foundation for administering provident fund, pension and insurance benefits.

In addition, the Ministry has also introduced three one-time compliance initiatives-Employees’ Enrolment Campaign, 2026, VISHWAS, 2026, and AMNESTY, 2026, known as special provision concerning, as notified under the EPF Scheme, 2026.

The Employees’ Provident Fund Organisation (“EPFO”), vide Circular dated 1st July 2026, has officially notified an 8.25% interest rate on EPF deposits for the financial year 2025-26.

II. THE LEGISLATIVE BACKGROUND

The CoSS was enacted on 28 September 2020 with the motive to amend and consolidate the laws relating to social security by subsuming nine central labour legislations. The code was brought into force with effect from 21 November 2025. However, the operation of the provident fund, pension and deposit-linked insurance framework remained contingent upon the notification of statutory schemes by the Central Government under Section 15 of the Code.

On 2nd March 2026 in meeting of Central Board of Trustees (“CBT”) of EPFO has approved the notification of new social security schemes. Following the approval, Central Government has now exercised its powers on 29 June 2026 under Section 15 (1) (a), (b), (c) of the Code to notify these schemes.

III. KEY HIGLIGHTS OF NEWLY NOTIFIED SCHEMES

1.  Employees’ Provident Fund (“EPF”) Scheme, 2026

The scheme brings in new modernised regulatory measures for administration, governance, membership, exempted establishments and digital compliance

1. Membership of new fund

The Scheme ensures continuity of membership by automatically migrating existing members under the EPF Scheme, 1952, avoiding any disruption in membership. Similarly, employees who were previously classified as excluded or exempt become eligible for membership immediately upon cessation of such exemption. The scheme also mandates every employee, employed in an establishment, to which this Scheme applies, will become a member of the Fund from the date the Scheme becomes applicable or from the date of joining the establishment, whichever is later.

Additionally, employees drawing wages above the statutory wage ceiling (currently INR 15,000 per month) may, with the joint consent of their employer, opt to become members or contribute on higher wages, thereby extending the benefit of provident fund coverage beyond the mandatory threshold.

2. Contributions and charges

The Scheme retains the existing statutory contribution structure. Both employer’s contribution and employees’ contribution are at the rate of 12% of the employees’ wage. For employees whose monthly wages exceed the prescribed wage ceiling (currently INR 15,000), mandatory contributions continue to be restricted to the statutory wage ceiling.

However, the Scheme introduces greater flexibility by permitting employees to opt an additional contribution voluntarily on wages exceeding the statutory wage ceiling at statutory rate. However, the employer is under no obligation to make such matching additional contribution, but, may if he so desires.

Further it permits both the employer and the employee to reduce or discontinue such voluntary contributions by mutual consent at any time. This flexibility enables employees to customise their retirement savings while balancing their financial commitments.

3. Improved digital Compliance Obligations

The scheme introduces greater reliance on electronic filings, digital records, and streamlined EPFO processes for employers and members. Every employer is under duty to file a consolidated return in FORM V, within fifteen days from the application of this Scheme. Alongside, to facilitate digital access, employers are required to employees with the necessary technical support to access and download their e-Passbooks.

Further, the Scheme enhances accountability in relation to contract labour by requiring principal employers to electronically furnish contractor details in Form X, while contractors are required to submit employee particulars, including the Universal Account Number (UAN), wages and provident fund contributions, in Form XI within the prescribed timelines. Employees are also required to furnish their Aadhaar, Aadhaar-seeded bank account, PAN and UAN for enrolment and compliance purposes.

Failure to comply with the prescribed filing requirements attracts a late fee of INR 500 per day, underscoring the Government’s increased emphasis on digital governance, timely reporting and strengthened compliance under the Code.

4. Framework for International Workers

The Scheme retains the applicability of India’s Social Security Agreements (“SSA”) by exempting eligible detached workers contributing to the social security system of their home country. It continues to define International Workers (“IW”) as foreign passport holder working in India in an establishment covered under CoSS and/or an Indian employee working in a foreign country with which India has a SSA and who is eligible for benefits under that SSA. Where, Nepalese and Bhutanese nationals continue to be treated as Indian workers and not as IW. Existing IW members under the EPF Scheme, 1952 shall continue to be members under the EPF Scheme.

Further, employers engaging IW are required to electronically maintain and report comprehensive information relating to nationality, wages, contributions, membership status and cessation of employment within fifteen days of the application of this Scheme.

5. Withdrawal Provisions

The Scheme consolidates and rationalises the provisions relating to partial and final withdrawal of provident fund accumulations. Members may continue to make partial withdrawals for specified purposes, including marriage, education, housing and medical treatment, subject to the prescribed conditions, while final withdrawal is permitted upon retirement, permanent incapacity, permanent migration outside India or other specified contingencies.

The Scheme also streamlines the structured framework for inoperative accounts, with the Central Board of Trustees approving auto-initiation of claim settlement for dormant EPFO accounts having balances up to INR 1,000, thereby facilitating faster settlement of unclaimed amounts. This initiative will facilitate faster credit of long-pending balances to members, reduce procedural delays, improve data accuracy, and further enhance ease of access and service delivery for EPFO members.

SPECIAL PROVISIONS

Collectively, these one-time initiatives reflect the Government’s transition strategy under the Code on Social Security, 2020. It provides employers with an opportunity to regularise historical defaults, resolve legacy disputes and align their establishments with the new regulatory regime.

2. Employees’ Pension Scheme (“EPS”), 2026

EPS, 2026 ensures continuity of pension benefits of existing pensioners and members continue their membership under the new Scheme without any interruption. The Scheme extends its membership to employees becoming members of the Employees’ Provident Funds Scheme, 2026. Membership continues until retirement, death, withdrawal benefit or vesting of pension, as applicable. Regional Provident Fund Commissioners are empowered to decide disputes regarding pension fund membership after hearing both employer and employee.

Employers are required to contribute 8.33% (subject to the notified wage ceiling), which is later credited to the Pension Fund, while the Central Government contributes 1.16% of wages. A notable feature of the Scheme is the incorporation of the higher pension framework. For eligible members who exercised the higher pension option under the earlier EPS, 1995, the employer’s contribution increases to 9.49%, reflecting the additional 1.16% contribution on wages exceeding Rs 15,000 per month.

The Scheme also permits early pension after attaining 50 years of age, subject to a reduction or deferred pension up to 60 years of age, subject to increase. Where a member leaves employment before completing the qualifying service required for pension a withdrawal benefit is allowed. However, withdrawal benefit is available only after 36 months from the date the last contribution became due or on attaining superannuation, whichever is earlier

The most striking operational change is the direction to EPFO to settle complete pension claims within 20 days. If a valid claim is delayed without sufficient cause, EPFO must pay interest at 12% per annum on the delayed amount. The Scheme also facilitates electronic maintenance of pension records, digital processing and electronic disbursement of pension benefits through banks, post offices and other authorised agencies.

3. Employees’ Deposit-Linked Insurance Scheme (“EDLI”), 2026

Membership under the Scheme continues to be linked to provident fund membership, providing life insurance benefits to the nominees or legal heirs of employees who die while in service. The employer is required to contribute to the Deposit-Linked Insurance Fund, with contributions calculated on wages as defined under CoSS. The rate of contribution shall be notified by the Central Government from time to time. Employers must deposit contributions and administrative charges electronically within 15 days after the close of every month.

The Scheme provides deposit-linked assurance benefits for employees to eligible nominees or legal beneficiaries upon the death of a member. A minimum assured base benefit of INR 50,000 is available to the dependents of the deceased member. The base benefit is capped to a maximum of INR100,000. Where the deceased member was in employment for a continuous period of 12 months preceding the month of death, the total assurance benefit ranges from Rs 2.5 lakh (minimum) to Rs 7 lakh (maximum).

IV. LEGAL IMPLICATIONS

The CoSS, 2020 was formed as a consolidating legislation intended to simplify India’s fragmented social security framework. However, until the notification of new Schemes a significant portion of the Code remained inoperative in practice. The new Schemes largely continue the substantive provisions that existed under the earlier framework. However, they introduced a more structured compliance through digital filings, defined timelines, greater employer accountability and clearer procedural requirements. The introduction of the three one-time Special provisions further shows the Government’s intention to encourage voluntary compliance and provide employers with an opportunity to regularise past defaults during the transition to the new regime.

Going forward, the focus is expected to shift from the enactment of the law to its effective compliance and enforcement. As these schemes are implemented, regulatory guidance will play an important role in clarifying their scope and application. For employers and other stakeholders, ensuring timely compliance with the new procedural requirements will be essential to avoid regulatory challenges and support the effective implementation of the Code.

 Footnotes

^{1 G.S.R. 525(E) dated 29 June 2026}

^{2 G.S.R. 527(E) dated 29 June 2026}

^{3 G.S.R. 526(E) dated 29 June 2026}

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