​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.

Overall Analysis

This editorial criticizes the process through which the new Employees’ Pension Scheme (EPS) 2026 was approved and raises concerns about transparency, consultation, and the potential impact on millions of workers and pensioners. The article argues that the decision-making process by the Employees’ Provident Fund Organisation lacked openness and stakeholder participation, making the reform appear arbitrary.

The editorial begins by highlighting that the scheme was approved by the Central Board of Trustees without prior public discussion or consultation with stakeholders. The scheme replaces the earlier Employees’ Pension Scheme 1995, affecting about 5.4 crore contributing members and over 82 lakh pensioners. The author emphasizes that such a significant policy change should have involved transparent communication and consultation, especially because the pension system directly impacts workers’ long-term financial security.

The editorial connects the new scheme to the broader labour reforms introduced under the Code on Social Security 2020, which was notified in 2025 along with other labour codes. However, the article criticizes the government and the Labour Ministry for not providing adequate details about how these changes would affect existing pension arrangements. This lack of clarity has created uncertainty among workers and pensioners.

The author then reviews several controversial changes introduced in recent years under the earlier scheme. These include limiting pension scheme coverage to workers earning up to ₹15,000 per month, changing the method for calculating pensionable salary from the average of the last 12 months to the last 60 months (which typically reduces pension benefits), and restricting the option to receive pension based on higher contributions. These changes have already been widely contested in courts, including the Supreme Court of India, which intervened in 2022 to allow some retirees to opt for a higher pension.

Despite this intervention, the editorial points out that many retirees who left service before 2014 could not benefit because of stringent conditions imposed by the EPFO. As a result, a large group of pensioners felt excluded from the benefits of the higher pension option.

The second part of the editorial focuses on provisions in the new EPS 2026 scheme. It notes that the option for higher pension has now been removed altogether, being described as legally outdated. Additionally, the scheme does not propose raising the wage ceiling of ₹15,000 for pension contributions, which has remained unchanged for over a decade. The minimum pension of ₹1,000 also remains unchanged, disappointing many pensioners who expected an increase due to inflation and rising living costs.

The editorial argues that the EPFO appears to be prioritizing the reduction of pension liabilities rather than improving social security coverage. According to the author, the pension system could remain sustainable if the government increased its funding contribution and if employers and employees were allowed to make higher voluntary contributions.

In its broader argument, the article emphasizes that pension policy should be guided by empathy and long-term planning rather than narrow financial considerations. Since the scheme affects crores of workers who depend on it for retirement security, reforms must be transparent, consultative, and oriented toward improving benefits.

Important Vocabulary (5)

1. Opaque – not clear or transparent; difficult to understand.
2. Corollary – something that naturally follows from another idea or policy.
3. Litigation – the process of taking legal action in court.
4. Ceiling – an upper limit set on something (such as salary for contributions).
5. Detriment – harm or damage that reduces benefits or advantages.

Conclusion & Tone

The editorial concludes that the introduction of the new pension scheme appears rushed and insufficiently transparent. Instead of merely changing rules and procedures, the government and the EPFO must adopt a more empathetic and consultative approach to ensure adequate retirement security for workers and pensioners.

Tone: Critical, analytical, and concerned about transparency and social security.