India is reportedly considering a Universal Pension Scheme that would be voluntary and contributory, which aims to extend social security beyond traditional employment to citizens. An Economic Times report suggest The ministry of labour and employment has initiated deliberations on the proposed umbrella scheme, which is expected to integrate existing pension programmes.
“The scheme, which would be voluntary and contributory, will not be tied to employment and hence will be open for everyone to contribute and earn a pension,” a senior government official was quoted as saying in the report.
Who All Will Benefit?
An NDTV report suggest that ‘universal pension scheme’ will be available to all citizens, including those in the unorganised sector. Currently those in the unorganised sector – such as construction workers, domestic staff, and gig workers – don’t have access to government-run large savings schemes. The scheme will also be open to all salaried employees and the self-employed too. If this is to be believed, The universal pension scheme is expected to target a wide demographic, including unorganised workers, traders, self-employed individuals, and others aged 18 and above who wish to secure pension benefits after turning 60.
How Will The Scheme Work?
The Employees’ Provident Fund Organisation (EPFO) is currently working on the proposed framework. Once finalized, discussions with stakeholders will be conducted to refine and implement the scheme effectively.
The plan aims to integrate existing pension schemes like the Pradhan Mantri-Shram Yogi Maandhan (PM-SYM) and the National Pension Scheme for Traders and Self-Employed (NPS-Traders). Under these schemes, beneficiaries currently receive a monthly pension of ₹3,000 after retirement, with contributions between ₹55 and ₹200, which are matched by the government.
However, unlike schemes under the Employee Provident Fund Organisation (EPFO), where both employees and employers contribute, the new proposal will be entirely voluntary. Individuals can choose to contribute, but the government will not provide any matching contributions.
Motive Of The Scheme
Reports suggest that a ‘universal pension scheme’ is in the works to streamline the country’s pension and savings framework, potentially integrating a few existing schemes. Designed as a voluntary option for all citizens, it aims to provide a secure retirement plan. According to NDTV, the proposed scheme, currently referred to as the ‘New Pension Scheme,’ will not replace or merge with the existing National Pension Scheme (NPS), which also operates on a voluntary basis. Stakeholder consultations will commence once the proposal document is finalized.
