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It is 2028. Ambar, a Mumbai-based gig worker, juggles jobs across three service apps. Since 2026, when the government mandated Employees’ Provident Fund (EPF) contributions for gig workers, a monthly “EPF” deduction has appeared in his earning statements across all three platforms.
Now diagnosed with cancer, Ambar tries to withdraw from his EPF corpus — a purpose for which withdrawal is allowed under EPF rules — only to be denied. The reason? Multiple employers have contributed to his account. The Employees’ Provident Fund Organisation’s (EPFO’s) rigid systems flag this as a discrepancy, freezing access. Marketed initially as a benefit, the mandate led platforms to reduce incentives. What was touted as a free safety net has become a paid-for trap.
This imaginary scenario may soon become a reality. EPFO’s subscriber base, already exceeding 80 million salaried workers, is expected to double with the inclusion of millions of gig economy participants. EPFO’s creaking infrastructure cannot handle this influx.
Ambar’s dilemma echoes an episode from the 1985 TV serial Rajni, where the protagonist (Priya Tendulkar) helps a retired worker retrieve his long-withheld PF. That such a predicament persists nearly four decades later is telling. Despite technological advances and changes in political leadership, the system — designed around control rather than empowerment — has barely evolved.
The contrast becomes starker when compared to the National Pension System (NPS). The difference between EPFO and NPS is more than administrative — it is philosophical. The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act) speaks the language of paternalism, seeking to provide for employees through centrally managed funds. It casts EPFO as a custodian expected to act in the subscriber’s best interest, even at the cost of their agency. In contrast, the Pension Fund Regulatory and Development Authority Act, 2013 (PFRDA Act) focuses on income security and subscriber protection — treating individuals as investors with choice, control and accountability. While EPFO prescribes, NPS enables.
This mindset shapes policy design. EPFO bars a married woman from nominating her parents — a moralistic intrusion into personal choice. Withdrawals may be blocked over trivial discrepancies — excess pension credits, overlapping employment dates or multiple concurrent employers. Even a routine Aadhaar mismatch can stall claims, requiring resolution through a former employer — often an impossible task.
At the heart of these inefficiencies is EPFO’s outdated architecture. Each employer is assigned a master account under which employee sub-accounts are created. Contributions are first credited to the employer account and then allocated to individuals — a two-step process vulnerable to reconciliation errors. When employees switch jobs, new sub-accounts are created under the new employer. Old balances must be manually transferred — often a bureaucratic nightmare. The Universal Account Number (UAN) only adds a digital layer without addressing the structural flaw.
Fund management under EPFO is opaque. Contributions are pooled and only later apportioned to individual accounts — often with delays. Interest for a financial year is typically credited well after year-end; for instance, the 2024–25 rate was notified in May 2025. The method for calculating returns is not transparent, with no market-linked benchmarks or net asset value (NAV) disclosures. This lack of daily fund visibility makes proposals like “withdraw EPF through bank ATMs” sound good in theory but unworkable in practice.
In contrast, NPS is built around the subscriber’s account. Once made, contributions are detached from the employer’s identity and treated as the subscriber’s capital. Investments are allocated transparently, based on the subscriber’s chosen asset mix and fund manager, with daily NAV tracking. Withdrawals are smooth and access issues rare. That said, NPS also requires reform — most notably, giving subscribers the option of periodic withdrawals instead of mandating the purchase of a fixed annuity.
Truth be told, if millions of gig workers are forced into EPF without the option of NPS, complaints about the system’s inefficiencies will intensify. Political parties will find it hard to ignore such a large number of affected subscribers. Recall that NPS, introduced by the Vajpayee government in 2003 with bipartisan support, offered India a modern, forward-looking pension framework. The question is whether the government will cling to a 20th-century construct — or embrace a 21st-century solution.
The writer heads Fee-Only Investment Advisors LLP, a Sebi-registered investment advisor;
X @harshroongta
(A slightly different version of this column first appeared in the Business Standard on June 02, 2025)