Concerns Over the New Employees’ Pension Scheme (EPS) 2026
The approval of the Employees’ Pension Scheme (EPS) 2026 by the Employees’ Provident Fund Organisation's (EPFO) Central Board of Trustees (CBT) has sparked significant concerns about transparency and stakeholder consultation.
Background and Impact
- Affects 5.4 crore contributing members and 82 lakh pensioners.
- EPS 2026 replaces the EPS 1995 scheme.
- Designed as a corollary to the Code on Social Security, 2020, notified in November 2025 without prior stakeholder input.
Historical Context of EPS 1995
- EPS 1995 has been subject to extensive litigation, including cases in the Supreme Court of India.
- Changes over the past decade have negatively impacted employees:
- Coverage restricted to those earning up to ₹15,000 monthly, deviating from universal coverage.
- Pensionable salary calculations changed from the last 12 months average pay to the last 60 months, reducing eligible pension amounts.
- Post-2014 retirees allowed higher pension options following Supreme Court intervention in 2022, but pre-2014 retirees mostly ineligible due to stringent conditions.
Key Features and Concerns of EPS 2026
- Option provision considered ‘obsolete’ and removed from the new Pension Scheme.
- No revision of the ₹15,000 PF contribution ceiling, initially set over 11 years ago.
- Minimum pension remains at ₹1,000, unchanged over the same period.
- EPFO’s approach is viewed as aiming to reduce the 'burden of pension commitment.'
Recommendations
To effectively address pension challenges, increased government funding and higher contributions from employers and willing employees are necessary. A positive mindset and empathy towards pensioners and contributors are crucial from both the Union government and EPFO. Legislative and procedural changes alone may not suffice to meet the needs of members and pensioners.
