The Employees' Provident Fund Organisation (EPFO) is considering a pension scheme for construction workers using surplus Building and Other Construction Workers' Welfare Cess (BoCW) funds. According to reports from Business Standard, construction workers with at least 10 years of service could be eligible for the pension under this proposal. The scheme was discussed at a meeting of EPFO's Central Board of Trustees (CBT) and will be placed before the CBT for consideration once the scheme is formulated. The proposal comes amid efforts to expand social security coverage to construction workers, a large proportion of whom work in the informal sector and remain outside conventional employment-based social security systems.
The proposal aims to better utilize funds collected under the BoCW cess, whose utilization has remained a concern for several years. As reported by Business Standard, ₹1.12 trillion in cess has been collected as of June 30, 2024, while ₹64,190 crore was spent as of March 2024. The boards reported an available balance of ₹65,970 crore, including bank interest and other receipts. The cess is levied on construction activity and managed by state governments through welfare boards for registered construction workers. The BoCW cess was introduced under the Building and Other Construction Workers' Welfare Cess Act, 1996, with states collecting the cess from construction establishments and using the proceeds for welfare schemes covering registered workers, including education, healthcare, housing, maternity benefits and pensions, depending on the state.
According to data from the labour ministry provided in a Rajya Sabha reply in July 2024, around 57 million workers were registered with BoCW Welfare Boards across states and Union Territories as of June 30, 2024. As reported by Business Standard, state representatives on the CBT backed using the cess funds for pension benefits, while the CBT vice-chairman called for a plan to improve their utilization. Any nationwide pension arrangement would require coordination with state governments, which manage the BoCW funds, and agreement on the use of accumulated funds and mechanisms for identifying eligible construction workers.
The pension proposal is part of the EPFO 3.0 initiative to modernize the retirement fund body's technology platform and expand access to social security, including for workers outside the traditional formal workforce. According to Business Standard, the CBT also considered extending Employees' State Insurance Corporation (ESIC) coverage to construction workers, with the possibility of their ESIC contributions being paid from the BoCW fund. This could provide workers access to medical and other social-security benefits alongside pension coverage. Queries sent to EPFO and the labour ministry remained unanswered until press time.
