There is great good news for the crores of employees and people working in the unorganized sector in the country. The central government is working on such a new pension system under EPFO 3.0, so that not only employees, but also gig workers, platform workers, freelancers, employees of the unorganized sector and people associated with small businesses can get pension. However, the government has not officially announced this scheme, but if it is implemented, it can prove to be the biggest change in the social security system in India so far.
According to the new system, every person can save regularly for their retirement and take the benefit of pension in the future. The special thing is that this scheme will be based on the defined contribution model. That is, the money deposited in the employee’s account from time to time will be invested in government securities and interest will be earned on it every year.
Two options for taking pension?
The most important thing about this new system is that people will have two options to withdraw their money at the time of retirement. The first is to buy an annuity plan of their savings, so that they get a fixed pension every month. The other is SWP. In this, they can withdraw money from their retirement fund at a fixed time every month. This will give people more freedom to use their pension as per their financial needs.
New benefits of TRS in EPFO 3.0
A new benefit called TRS or Target Retirement Sum has also been proposed in EPFO 3.0. According to this, the member can decide in advance how much money he needs at the time of retirement. Based on this, the system will tell how much money to save per month or per year. Each member will get a digital dashboard where he can see real-time information about his total contribution, his retirement fund, estimated pension, savings and retirement status in terms of inflation. If an individual wants to change his goal later, he can do so.
Focus on gig and unorganized sector
The government’s focus will be mainly on employees in the gig and unorganized sector. About 2.5 crore gig workers and manufacturing sector employees will be brought under this new system in the next 5 years. Apart from this, there will also be the facility of linking one UAN (Universal Account Number) with multiple employers or digital platforms. With this, people who earn income from more than one source can see all their PF and pension related information from a single account.
The scheme will provide more flexibility to people
This scheme will try to provide more flexibility to people after retirement. If a person has Rs 1 crore deposited in his account at the time of retirement and gets 8% annual interest on it, then he will get Rs 8 lakh as interest every year. If the person wants, he can protect the capital by taking the interest money or if necessary, withdraw more money from the capital. With this, every person can make a pension plan as per his financial condition and needs.
CBS based advanced technology
To operate all these facilities effectively, EPFO 3.0 will be connected with Core Banking Solution (CBS) based advanced technology. EPFO has already integrated 123 sectoral databases under its 2.0 system. This new technology is expected to make claim processing, account information and pension management faster and more transparent than before. However, this proposal is currently under consideration. The government has not announced any specific date for its implementation.
