India does have social security, but not as a single federal program like the one Americans know. It runs as a layered system: mandatory employer-funded schemes for people in formal jobs, heavily subsidized government insurance for the informal workforce, and voluntary retirement accounts anyone can open. The Code on Social Security, 2020 began taking effect in late 2025 and consolidates nine older labor laws into one framework, though the underlying benefits go back decades.
Why There Is No Single Program
India’s workforce splits into two categories that decide which protections apply. The organized (formal) sector covers people employed by registered businesses, factories, and establishments above a certain size. The unorganized (informal) sector covers the self-employed, daily wage earners, agricultural laborers, domestic workers, and the growing pool of gig and platform workers. About 90 percent of India’s labor force sits in the informal category, which is why the government-funded schemes carry so much weight.
For formal workers, coverage turns on establishment size. The provident fund system applies to any business with 20 or more employees. Health insurance under the Employees’ State Insurance scheme covers factories and establishments with 10 or more workers in notified districts.1EPF India. No Change in The Threshold of 20 or More Employees Under the EPF Act2Press Information Bureau. ESI Hospitals Individual eligibility inside those establishments often depends on salary. Both central and state governments share administrative responsibility, so rules vary by region.
What Formal-Sector Workers Get
Retirement Savings and Pension
The backbone is the Employees’ Provident Fund. The employee and the employer each contribute 12 percent of basic salary plus dearness allowance into a retirement account.3EPF India. Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 For FY 2025-26 the approved interest rate on those balances is 8.25 percent, unchanged for a third year running.
Not all of the employer’s 12 percent goes into the provident fund. A portion of 8.33 percent is diverted to the Employees’ Pension Scheme, which pays a monthly pension from age 58 for workers with at least 10 years of contributing service. The remaining 3.67 percent stays in the provident fund. You can withdraw the full provident fund balance at retirement, or two months after leaving a job. The pension component pays as a recurring monthly benefit rather than a lump sum.
Life Insurance Through EDLI
Every EPF member is automatically covered by the Employees’ Deposit Linked Insurance Scheme. If a covered worker dies during employment, the nominee receives a payout tied to the worker’s average EPF balance. The minimum is ₹2.5 lakh and the maximum is ₹7 lakh.4EPFO. Insurance Scheme (EDLI) The employee pays nothing; the employer funds the premium.
Health Coverage Under ESI
Workers earning up to ₹21,000 per month (₹25,000 for workers with disabilities) qualify for the Employees’ State Insurance scheme.2Press Information Bureau. ESI Hospitals It provides medical care, sickness benefits, maternity leave, and disability coverage. Employers pay 3.25 percent of wages and employees pay 0.75 percent.5ESIC. ESIC Contribution Coverage extends to the worker’s dependents, including spouses, children, and in some cases parents.
ESI runs its own network of hospitals and dispensaries, and covered workers get cashless treatment there or at empaneled private providers. Sickness benefits typically replace about 70 percent of wages for up to 91 days a year, with extensions for chronic conditions.
Maternity Leave
Women in covered workplaces get 26 weeks of paid maternity leave for the first two children, one of the longest statutory entitlements anywhere. For a third child, the entitlement drops to 12 weeks. Eligibility requires at least 80 days of work in the 12 months before the expected delivery date. The employer pays wages during the leave, unless the worker is covered under ESI, in which case the benefit flows through that scheme.
Gratuity
Any establishment with 10 or more employees must pay gratuity to workers who leave after five continuous years of service. The five-year requirement is waived on death or disability. The formula is 15 days of the worker’s last-drawn salary per completed year of service, calculated on a 26-day working month.6Chief Labour Commissioner. Payment of Gratuity Act, 1972 For private-sector workers, gratuity is capped at ₹20 lakh. The employer bears the full cost.
What Informal and Gig Workers Get
Because informal workers rarely have an employer making matched contributions, the government fills the gap with subsidized schemes funded by tax revenue and token premiums. Over 31.38 crore unorganized workers have registered on the e-Shram portal, which assigns each one a Universal Account Number and acts as the gateway to welfare programs.7Press Information Bureau. Over 31.38 Crore Unorganised Workers Registered on e-Shram Portal The Code on Social Security, 2020 formally brought gig workers and platform workers under the social security framework for the first time.8Dattopant Thengadi National Board for Workers Education and Development. The Code on Social Security, 2020
Two central insurance schemes anchor this coverage:
- Pradhan Mantri Jeevan Jyoti Bima Yojana pays ₹2 lakh on death from any cause, for an annual premium of ₹436, auto-debited from the subscriber’s bank account.9Department of Financial Services. Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)
- Pradhan Mantri Suraksha Bima Yojana pays ₹2 lakh for accidental death or total permanent disability, and ₹1 lakh for partial permanent disability, for an annual premium of ₹20.10Department of Financial Services. Pradhan Mantri Suraksha Bima Yojana (PMSBY)
The premiums are kept nearly negligible by design. The trade-off is that payouts are modest, providing short-term relief rather than long-term security. For many families in rural India, ₹2 lakh still covers a year or more of basic expenses.
Voluntary Options Anyone Can Join
National Pension System
The National Pension System is a market-linked retirement account open to any Indian citizen between 18 and 70.11National Pension System Trust. About NPS Contributions are invested across equity, corporate bonds, and government securities according to the subscriber’s choices. At age 60, up to 60 percent can be withdrawn tax-free as a lump sum; the remaining 40 percent must buy an annuity that provides monthly pension income for life.12Department of Financial Services. National Pension System – All Citizen Model
NPS is mandatory for central government employees hired since January 2004, and voluntary for everyone else. Voluntary subscribers can deduct contributions up to ₹50,000 a year under Section 80CCD(1B), on top of the ₹1.5 lakh Section 80C ceiling.13National Pension System Trust. Tax Benefits Under NPS The extra deduction is available only under the old tax regime.
Atal Pension Yojana
The Atal Pension Yojana targets people without access to employer pensions. Anyone aged 18 to 40 with a savings bank account can enroll and lock in a guaranteed monthly pension of ₹1,000, ₹2,000, ₹3,000, ₹4,000, or ₹5,000 payable from age 60 until death.14Jan Suraksha. Atal Pension Yojana (APY) – Details of the Scheme The monthly contribution depends on the pension amount chosen and the age of entry, so joining younger is cheaper. On the subscriber’s death, the accumulated pension wealth passes to the nominee. Since October 2022, income tax payers can no longer open new APY accounts.
Public Provident Fund
The Public Provident Fund is a government-backed savings account with a 15-year lock-in.15National Savings Institute. Public Provident Fund Account The interest rate for FY 2025-26 is 7.1 percent per annum, and both contributions and interest are exempt from income tax. Partial withdrawals become available in the seventh year, and loans against the balance are permitted from the third through the sixth year. The account balance is also protected from court attachment.
A Note for Americans Working in India
If you are moving between the United States and India, do not assume the two systems talk to each other. The United States has totalization agreements with dozens of countries that stop workers from paying into both systems at once and let them combine service credits across borders. India is not on that list.16Social Security Administration. U.S. International Social Security Agreements
India has bilateral social security agreements with about 20 countries, including Germany, France, Canada, Australia, Japan, and South Korea, but the United States is absent from that list.17Ministry of External Affairs. Social Security Agreements American workers whose Indian employer is covered must contribute to the EPF system, and those years of Indian contributions cannot be credited toward U.S. Social Security benefits. Workers leaving India permanently can withdraw their full EPF balance, though the withdrawal may carry tax consequences in both countries.