The Employees’ Provident Fund Organisation is exploring a new pension plan for construction workers, utilising unspent Building and Other Construction Workers cess funds, as part of a broader push to enhance social security for informal economy workers across India.
The Employees’ Provident Fund Organisation is weighing a pension plan for construction workers that could draw on unspent Building and Other Construction Workers, or BoCW, cess, according to Business Standard. The proposal, discussed at a meeting of the Central Board of Trustees, would apply to workers with at least 10 years of service and is being linked to EPFO 3.0, the retirement fund body’s wider push to modernise its systems and widen social security coverage.
The idea is aimed at putting idle cess collections to more productive use. BoCW levies are charged on construction activity and are collected by state governments, which channel the money through welfare boards for registered workers. Over the years, however, the size of the fund and the pace of spending have raised concerns about weak utilisation. State representatives on the board backed the idea of using the money for pension benefits, while the board’s vice-chairman called for a plan to improve how the funds are used.
That backdrop matters because the BoCW system already covers a very large workforce. As of June 30, 2024, about 57 million workers were registered with welfare boards across states and Union Territories. In a July 2024 reply in the Rajya Sabha, the labour ministry said the boards had collected ₹1.12 trillion in cess and spent ₹64,190 crore by March 2024, leaving an available balance of ₹65,970 crore, including interest and other receipts. The cess, created under the Building and Other Construction Workers’ Welfare Cess Act, 1996, is used for benefits that can include education, healthcare, housing, maternity support and, in some states, pensions.
The proposed pension would also mark a broader shift in how India tries to extend formal protection to workers in the informal economy. Construction workers are especially exposed because many move between jobs and employers, making conventional employment-based benefits difficult to access. Economic Times reported that a Regional Provident Fund Commissioner has already argued that an EPFO-linked scheme could offer stronger protection than the existing BoCW framework, including lifetime pension and death benefits as well as portability.
Any nationwide arrangement would still require agreement with state governments, which control the cess money and would need to decide how eligible workers are identified and how accumulated funds are used. According to the same reports, the board also considered extending Employees’ State Insurance Corporation coverage to construction workers, with contributions potentially paid from BoCW funds, which could add medical and other social-security cover alongside a pension.
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