EPF, EPS, EDLI 2026: Employers should review payroll, HR, and compliance processes, says Grant Thornton

The Ministry of Labour and Employment has operationalised key provisions of the Code on Social Security, 2020 by notifying the Employees' Provident Funds (EPF) Scheme, 2026, Employees' Pension Scheme (EPS), 2026, and Employees' Deposit-Linked Insurance (EDLI) Scheme, 2026, replacing the existing frameworks governing provident fund, pension and insurance benefits.

According to Grant Thornton Bharat, which analysed the new schemes, employers should review payroll, HR, finance, and compliance systems to align with the revised wage definition, updated withdrawal rules, governance requirements, digital filing obligations, and contractor-related compliance. It also advised organisations to evaluate whether they can utilise the three one-time relief schemes to regularise legacy compliance issues.

The new schemes are aimed at modernising India's social security framework while ensuring continuity of existing benefits. They also introduce greater digitalisation, streamlined compliance, enhanced governance and improved accountability in claim settlements.

Under the new EPF Scheme, all existing members will automatically continue under the revised framework without requiring fresh enrolment. The scheme also adopts the unified definition of "wages" under the Social Security Code, under which specified exclusions are capped at 50% of total remuneration, potentially expanding the contribution base. However, the statutory wage ceiling of ₹15,000 per month and the existing contribution structure of 12% each by employers and employees (10% for specified establishments) remain unchanged.

One of the key reforms is the simplification of withdrawal rules. The scheme consolidates advance withdrawals into three broad categories—essential needs, housing needs and special circumstances—and standardises withdrawal limits. It also mandates that at least 25% of a member's provident fund balance must remain untouched even after partial withdrawals to preserve retirement savings.

The rules for unemployment-related withdrawals have also been tightened. While the previous framework allowed complete withdrawal after two months of unemployment, the new scheme permits withdrawal of up to 75% of the balance during unemployment, with full withdrawal allowed only after 12 months of continuous unemployment.

To improve administrative accountability, the Employees' Provident Fund Organisation (EPFO) has been mandated to process claims or communicate deficiencies within 20 days. Delays beyond the prescribed timeline in specified cases will attract 12% annual interest, recoverable from the salary of the concerned commissioner.

The scheme also moves employee declarations and nominations entirely online through the EPFO portal, eliminating physical forms. Additionally, the Centre has been empowered to temporarily reduce or defer EPF contribution rates for up to three months during emergencies such as pandemics or major natural disasters.

For employers, the new framework strengthens compliance requirements by clearly defining the responsibilities of principal employers for contract workers, introducing revised penalty rates for delayed contributions and providing greater clarity on inoperative accounts. It also largely retains the existing provisions for international workers.

The EPF Scheme, 2026 also introduces three one-time compliance initiatives. The Employees' Enrolment Campaign, 2026 allows employers to regularise eligible workers not enrolled between April 1, 2009 and March 31, 2026, with employee contributions waived where no deductions were made and damages capped at ₹100. The VISHWAS 2026 scheme offers a settlement mechanism for pending provident fund damages proceedings, while the AMNESTY 2026 scheme gives private provident fund trusts a six-month window to regularise exemption-related non-compliance.

The notification also significantly strengthens governance norms for exempted provident fund trusts. Existing exempted establishments will be required to reapply for continuation of exemption, exemptions will initially be valid for three years, mandatory board meetings will have to be held every quarter, auditor rotation has been introduced, and penalties have been prescribed for delayed filing of returns.

Under the Employees' Pension Scheme (EPS), 2026, withdrawal benefits have been restricted until completion of a 36-month waiting period from the last contribution or attainment of the superannuation age, whichever is earlier. The scheme also formally incorporates the higher pension option, retains pension calculation based on the average monthly salary over the last 60 months of service, and continues the incentive of a 4% annual increase in pension for members who defer drawing pension up to the age of 60 years. Pension claims will also have to be settled within 20 days.

The Employees' Deposit-Linked Insurance (EDLI) Scheme, 2026 aligns employer contributions with the revised definition of wages under the Social Security Code while retaining the overall insurance benefit structure. It mandates electronic payment of contributions, introduces a statutory 20-day timeline for claim settlement and enhances protection for beneficiaries of exempted establishments by ensuring employers remain liable if insurers fail to settle eligible claims.