The Indian Government is reportedly working on a Universal Pension Scheme aimed at providing financial security to all citizens in their retirement years. If implemented, this initiative could be a game-changer for millions, especially those in the unorganised sector who currently lack any formal pension system.
What Is the Universal Pension Scheme?
The proposed Universal Pension Scheme aims to provide a fixed monthly pension to eligible individuals, ensuring they have a stable income after retirement. Unlike existing pension schemes that primarily cater to government employees or specific sectors, this programme would cover all citizens, including those in private jobs, self-employment, and informal labour markets.
Who Will Benefit?
- Workers in the Unorganised Sector
- India’s workforce is largely informal, with over 90% of workers in the unorganised sector. These include daily wage labourers, farmers, street vendors, and domestic workers, who often lack social security benefits.
- Senior Citizens Without Pension
- Many elderly individuals in India do not receive a pension, especially those who were self-employed or worked in private jobs without retirement benefits.
- Self-Employed Individuals
- Unlike salaried employees, small business owners, freelancers, and gig workers do not have access to employer-sponsored pension plans. This scheme could provide them with financial stability.
- Low-Income Groups
- The government is likely to introduce subsidised contributions or direct financial support for low-income individuals who may struggle to save for retirement.
How Will It Work?
Although official details are yet to be announced, the scheme is expected to function similarly to the Atal Pension Yojana (APY), where individuals contribute a small amount during their working years and receive a pension upon retirement. The government may also provide matching contributions or tax benefits to encourage participation.
Challenges and Concerns
- Funding Requirements: A universal pension system would require significant financial resources from the government.
- Enrolment and Awareness: Educating and enrolling workers, especially in rural areas, could be challenging.
- Sustainability: Ensuring long-term viability while keeping contributions affordable is crucial.
Conclusion
The Universal Pension Scheme could be a major step towards financial security for all Indians. If executed well, it could reduce elderly poverty and provide retirement stability for millions. However, its funding model, implementation strategy, and long-term sustainability will determine its success.