India: New EPF, EPS & EDLI Schemes 2026 under the Code on Social Security – Effective 29 June 2026

On 29th June 2026, the Ministry of Labour & Employment notified three new schemes under the Code on Social Security, 2020:

• The Employees’ Provident Fund Scheme, 2026
• The Employees’ Pension Scheme, 2026 and
• The Employees’ Deposit-Linked Insurance Scheme, 2026,

superseding the 1952, 1995 and 1976 schemes with immediate effect. This alert captures only the measures that affect payroll, employers and employees.

With the introduction of these schemes, the contribution rates and the ₹15,000 monthly wage ceiling remain unchanged. The reforms are principally to the legal framework, the contribution base (“wages” under the Code), withdrawal rules, member KYC, digital compliance and the governance of exempted trusts. Existing members, accumulated balances and service continue seamlessly, and existing pensioners are unaffected.

Following is the key impact  of these new schemes:

What Has Changed – Three New Schemes under the Code on Social Security

The Code on Social Security, 2020 (in force since 21st November 2025) empowers the Central Government to frame schemes for provident fund, pension and deposit-linked insurance in place of those made under the repealed Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. On 29th June 2026, all three schemes were notified together and took effect immediately.

Contribution Rates, Wage Ceiling and the New “Wages” Base

• Rates (unchanged): EPF – 12% employee and 12% employer of wages, with a reduced 10% rate continuing for notified categories of establishment. Of the employer share, 8.33% is diverted to EPS (restricted to the wage ceiling). EDLI – employer contributes 0.5% of wages, capped at ₹75 per employee per month, with no employee contribution.
• Wage ceiling (unchanged): ₹15,000 per month, notified under Section 2(89) of the Code on Social Security via S.O. 2701(E) dated 29 May 2026. Mandatory contributions for members earning above the ceiling remain restricted to the ceiling amount; voluntary contributions on higher wages, or at a rate above 12%, are permitted and may be reduced or discontinued at any time.
• New contribution base (“wages”): The schemes now compute contributions on “wages” as defined under the Code, replacing “basic wages” under the repealed 1952 Act. Where the aggregate of excluded allowances (e.g. HRA, conveyance, overtime) exceeds 50% of total remuneration, the excess is deemed “wages” and added to the contribution base. Employers using allowance-heavy pay structures should re-test the PF base, as it may increase.
• Payroll impact: No rate change to configure, but the “wages” base and the 50%-exclusion test should be validated for the affected employee population; challan and ECR references move to the 2026 Schemes.

Simplified Withdrawals, KYC and Digital Compliance (EPF)

• Withdrawals: The earlier purpose-wise list is consolidated into three broad categories – illness; education and marriage; and housing – plus specified special circumstances, with up to 100% of the eligible balance withdrawable, subject to prescribed conditions and a minimum-balance requirement.
• Member KYC: Aadhaar, PAN and a seeded bank account are mandatory for PF transactions – these should be captured and validated at onboarding and cleansed for the existing population.
• Employer compliance: The framework adds enhanced obligations around contractor compliance, ownership disclosures, electronic filings and a prescribed return within 15 days. Separately, under the Code, simple interest of 12% p.a. on delayed contributions applies to any amount due, deemed effective from the 21st November 2025. The Central Government may defer or reduce contributions for up to three months during a pandemic, epidemic or national disaster.
• Exempted (own-trust) establishments: Tighter governance applies – trustee eligibility, mandatory meetings, electronic accounting, annual audits, dematerialised investments, online disclosures, reporting timelines and exemption renewal – with penalties for delayed reporting; inspection charges are payable to EPFO in lieu of direct fund management.

Pension (EPS 2026) and Life Cover (EDLI 2026)

• EPS 2026: Replaces EPS-95 and the Employees’ Family Pension Scheme 1971. The pension formula is unchanged – Monthly Pension = (Pensionable Salary × Pensionable Service) ÷ 70 – with pensionable salary based on the average of the last 60 months. Superannuation pension is payable after at least 10 years of eligible service; early (reduced) penson is available from age 50 at a 4% reduction for each year drawn before normal retirement age; a Scheme Certificate is available where service is under 10 years. The higher-pension option (following the Supreme Court judgment) is formally incorporated – for such members the employer contributes an additional amount on wages above the ceiling, taking the effective employer contribution to approximately 9.49%.
• EDLI 2026: Replaces the EDLI Scheme 1976. Employer-funded life cover continues at no cost to employees, funded by the 0.5% / ₹75-cap employer contribution. Existing assurance parameters – maximum benefit ₹7,00,000 and minimum ₹2,50,000 (per GSR 299(E) dated 28 April 2021), with a ₹50,000 floor introduced in July 2025 – are understood to carry forward.
• Payroll impact: No employee-side change. Flag EPS higher-pension members for the ~9.49% employer treatment, and maintain EDLI cover and nominations. Existing pensioners are unaffected.

Please contact your Mercans’ services delivery team for any additional information regarding the implications of the above change.

Mercans Recommends

View PDF

India: New EPF, EPS & EDLI Schemes 2026 Under the Code on Social Security, Effective 29 June 2026

Size

2.20 MB