The NPS, the Employees' Provident Fund and the Code on Social Security, 2020

India has two main retirement systems for employees: the NPS, regulated by PFRDA, and the Employees' Provident Fund and associated pension scheme, administered by the EPFO. Since 21 November 2025, the EPF system has been governed by the Code on Social Security, 2020, which replaced the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. This note explains how the two systems relate, and where the Code touches the NPS.

1. The Code on Social Security, 2020

• Consolidation: the Code consolidates nine earlier laws on social security, including the EPF Act, 1952, the Employees' State Insurance Act, 1948, the Payment of Gratuity Act, 1972 and the Maternity Benefit Act, 1961.
• In force: most of its provisions came into force on 21 November 2025, along with the other three labour codes.
• Provident fund chapter: Chapter III (Sections 14 to 23) replaces the provident fund provisions of the 1952 Act.
• New schemes: the Employees' Provident Funds Scheme, 2026, the Employees' Pension Scheme, 2026 and the Employees' Deposit-Linked Insurance Scheme, 2026 were notified on 29 June 2026, replacing the schemes of 1952, 1995 and 1976, which had continued in the transition.
• Gig and platform workers: the Code recognises gig workers and platform workers and provides for social security schemes for them, funded partly by contributions from aggregators.

2. The EPF System in Outline

• Coverage: establishments with twenty or more employees, and employees within the wage ceiling (₹15,000 a month) on a compulsory basis, with voluntary coverage above it.
• Contributions: generally 12 per cent of wages from the employee and 12 per cent from the employer, of which 8.33 per cent of the employer's share goes to the pension scheme.
• Provident fund: a defined contribution account earning an interest rate declared each year, with withdrawals for specified purposes and on retirement or leaving employment.
• Employees' Pension Scheme: a defined benefit pension based on pensionable salary and service, subject to a minimum pension.
• Insurance: a deposit-linked life insurance benefit.

3. NPS and EPF Compared in Law

• Source of law: EPF under the Code on Social Security; NPS under the PFRDA Act.
• Administrator: EPF by the EPFO, a statutory body under the Ministry of Labour; NPS by PFRDA and registered intermediaries under the Ministry of Finance.
• Compulsion: EPF is compulsory for covered establishments; the NPS is compulsory for Government employees but voluntary for most private employees.
• Returns: EPF pays a declared interest rate; NPS returns are market-linked.
• Exit: EPF allows the full balance to be withdrawn on retirement; the NPS requires partial annuitisation.
• Exempted establishments: some employers run their own provident fund trusts under exemption, subject to EPFO supervision; there is no equivalent within the NPS.

4. Links between the Two Systems

• Employer schemes: many private employers offer the corporate NPS in addition to EPF, so employees may belong to both.
• Transfers: subscribers have been permitted to transfer accumulations from a recognised provident fund or superannuation fund to their NPS account, with tax neutrality under the income tax law.
• Tax cap: employer contributions to EPF, NPS and superannuation funds together are subject to the ₹7.5 lakh annual limit before becoming taxable as a perquisite.
• Government employees: Central Government employees recruited from 2004 are under the NPS, not the GPF-based Old Pension Scheme; the EPF system does not apply to them.
• Gig workers: the Code's schemes for gig and platform workers and PFRDA's Multiple Scheme Framework, which allows NPS schemes for platform workers, may operate side by side.

5. Policy Issues

• Fragmentation: two parallel systems under different ministries and regulators lead to duplication and confusion for employees.
• Portability across systems: moving between EPF and NPS is possible in one direction, but the systems are not fully integrated.
• Adequacy: EPF balances are often withdrawn early, and the EPS pension is modest; the NPS locks in savings but exposes them to market risk.
• Universal coverage: the Code's attention to gig, platform and unorganised workers, and the NPS's open architecture, are both attempts to extend coverage beyond formal employment.

6. Related Topics and Provisions

• PFRDA and other financial regulators
• The NPS across sectors
• The Multiple Scheme Framework
• Taxation of the NPS
• NPS versus EPF and PPF