India's Universal Pension Scheme: Who will benefit and how
What's the story
The Indian government is working on a Universal Pension Scheme (UPS) to provide social security benefits beyond traditional employment.
The scheme, which is being designed by the Union Ministry of Labour and Employment, seeks to offer a structured pension system to a broader section of the population.
It will be available to unorganized sector employees, salaried workers, and even self-employed individuals.
Scheme details
UPS aims to simplify India's pension structure
The UPS aims to simplify India's pension and savings structure by possibly merging some existing schemes.
It will act as a secure voluntary savings option for all citizens, including those in the unorganized sector such as construction workers, domestic staff, and gig workers.
The scheme is not employment-linked, allowing self-employed and unorganized sector workers to contribute voluntarily toward their retirement fund.
Scheme supervision
EPFO is overseeing the development
The Employees's Provident Fund Organisation (EPFO) is overseeing the development of the UPS.
Once the framework is finalized, consultations with stakeholders will be held to ensure smooth implementation.
Unlike existing schemes under EPFO where contributions are mandatory, this new scheme will allow entirely voluntary contributions without any financial input from the government.
Scheme integration
UPS may incorporate existing pension programs
The proposed UPS is likely to include existing pension schemes such as the Pradhan Mantri Shram Yogi Maandhan (PM-SYM) and the National Pension Scheme for Traders and Self-Employed (NPS-Traders).
The government is also mulling over using cess collected under the Building and Other Construction Workers (BoCW) Act to provide pensions to construction sector workers.
The central government could also nudge states to merge their existing pension schemes into this unified initiative.
Scheme objective
Aim to establish a more inclusive pension system
By 2036, India's elderly population (aged 60 and above) is expected to touch 227 million, constituting 15% of the population.
The proposed UPS aims to widen coverage and create a more inclusive and sustainable pension system for the country's workforce.
This move comes in line with global trends where countries such as Denmark, Sweden, Norway, the Netherlands, and New Zealand have universal pension schemes.