Universal Pension Scheme coming! Benefits for all, no job conditions required.

The government is contemplating the introduction of a voluntary and contributory Universal Pension Scheme. In this scheme, there will be no employment requirement, allowing workers from the unorganized sector, small traders, and self-employed individuals to access pension benefits. This scheme can incorporate existing programs such as Pradhan Mantri Shram Yogi Maandhan (PM-SYM) and National Pension Scheme (NPS-Traders), thereby enhancing social security.

The central government is contemplating the introduction of a Universal Pension Scheme. Participation will be voluntary and contributory. This pension scheme will not require employment as a condition, allowing ordinary citizens to contribute and receive benefits. This scheme aims to broaden the scope of social security beyond just traditional employment. The Ministry of Labor and Employment has begun talks about this proposed umbrella scheme, which aims to integrate existing pension schemes.

What will occur in the Universal Pension Scheme?

This scheme is being developed under the Employees Provident Fund Organization (EPFO). Once its final draft is prepared, input from various stakeholders will be gathered.

• The new scheme will be optional, allowing anyone to join regardless of their employment status.

• This will allow individuals from the unorganized sector, like small traders and self-employed individuals, to join the scheme as well.

• This can involve the integration of existing pension schemes such as Pradhan Mantri Shram Yogi Maandhan (PM-SYM) and National Pension Scheme (NPS-Traders).

• With contributions between ₹55 and ₹200, and the government matching these contributions, these schemes offer a retirement pension of ₹3,000 per month.
• There is also consideration of the possibility of including Atal Pension Yojana (APY) within this new structure.

• Additionally, the government is contemplating the use of funds obtained through the cess under the Building and Other Construction Workers (BoCW) Act to provide pension financial support for construction workers.

Who will benefit?

This scheme is tailored specifically for workers in the unorganized sector, small business owners, self-employed individuals, and other citizens. Individuals aged 18 and above who wish to receive pension benefits after turning 60 can enroll in it.

The federal government can additionally motivate the states to consolidate their pension schemes with this one. This will centralize pension contributions. This will enhance the pension disbursement. It will also deter individuals from exploiting the opportunity for a higher pension.

Rising strain from the aging demographic in India

Current estimates suggest that by 2036, the population of senior citizens (aged 60 and above) in India could reach 22.7 crores. This will constitute 15 percent of the overall population. Simultaneously, by the year 2050, this number could hit 34.7 crores, accounting for 20 percent of the overall population.

Conversely, nations such as the US, Canada, Europe, Russia, and China have established social security systems. This encompasses pensions, health services, and unemployment benefits. Countries such as Denmark, Sweden, Norway, the Netherlands, and New Zealand have already implemented universal pension schemes.

Current social security framework in India

Currently, India’s social security system primarily consists of the Provident Fund, Old Age Pension, and Health Insurance for impoverished segments of the population.

This proposed Universal Pension Scheme aims to broaden the reach of such schemes and establish an inclusive and sustainable pension system, enabling an increasing number of people to access social security.

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