Universal Pension Scheme: Govt is working on a new pension scheme for All Citizens
The Indian government is reportedly working on a Universal Pension Scheme, which will be a voluntary retirement plan open to all individuals, regardless of their job type. Unlike traditional pension schemes that are linked to specific jobs, this new scheme will be accessible to workers from all sectors, including those in the unorganised sector, self-employed individuals, and traders.
According to a report, the Labour Ministry has already begun discussions on this scheme, which aims to help individuals save for their retirement and secure financial stability in old age.
Who Will Be Eligible for the Universal Pension Scheme?
The proposed pension scheme will be available to all Indian citizens aged 18 and above. The main groups that will benefit include:
1. Unorganised Workers
These are individuals who do not have a fixed employer or formal work contracts. Examples include:
- Daily wage laborers
- Domestic workers (maids, housekeepers)
- Construction workers
- Rickshaw pullers
- Street vendors
- Agricultural laborers
2. Traders and Small Business Owners
People running their own businesses, especially small traders and shopkeepers, often do not have access to structured retirement benefits. This scheme will provide them with an opportunity to secure their future.
3. Self-Employed Individuals
Freelancers, independent contractors, and gig workers (such as delivery agents and online service providers) will also be eligible. Since they do not work for a company that provides retirement benefits, this scheme will help them plan for old age.
4. Other Individuals Who Do Not Have Formal Pension Coverage
Many people in India do not have a formal pension system because they are not covered under existing schemes like the Employees’ Provident Fund (EPF) or corporate pension plans. The Universal Pension Scheme will provide them with an option to contribute voluntarily towards their retirement.
How Will the Universal Pension Scheme Work?
- Voluntary Contributions
- Unlike schemes linked to specific jobs, this pension scheme will be voluntary. Anyone can choose to join and contribute based on their financial capability.
- The government may provide incentives (such as a matching contribution) to encourage participation.
- Flexible Payment Options
- Individuals can contribute monthly, quarterly, or annually.
- The contribution amount could vary based on income and affordability.
- Pension Benefits After Retirement
- The government is expected to offer a fixed monthly pension after retirement, similar to existing pension schemes.
- The amount of pension received will depend on the contributions made over the years.
- Not Linked to Any Specific Employment
- Unlike the Employees’ Provident Fund (EPF), which is only available to salaried employees, this scheme will be open to everyone, including those without a formal employer.
Government’s Next Steps
- The Labour Ministry is currently working on finalizing the framework of the scheme.
- After drafting the initial plan, the government will seek feedback from stakeholders, including:
- Financial experts
- Labour unions
- Business organizations
- Policy advisors
- The scheme will then be fine-tuned and finalized before implementation.
What Is the Purpose of Universal Pension Scheme?
1. Merging Existing Pension Schemes into One System
Currently, India has several small pension schemes for different groups. The government wants to combine them into one easy-to-access system. Some of the schemes that may be merged include:
- Pradhan Mantri Shram Yogi Maandhan (PM-SYM):
- A voluntary pension scheme for unorganised workers.
- Provides ₹3,000 monthly pension after the age of 60.
- Workers contribute ₹55 to ₹200 per month, with the government contributing the same amount.
- National Pension Scheme for Traders and Self-Employed (NPS-Traders):
- Similar to PM-SYM, it provides a ₹3,000 pension after retirement.
- Designed specifically for shopkeepers and small traders.
- Atal Pension Yojana (APY):
- This scheme may also be merged into the new Universal Pension Scheme.
- Building and Other Construction Workers (BoCW) Fund:
- The government may use the money collected under this fund to support pensions for construction workers.
2. Providing Social Security for an Aging Population
- India’s population of senior citizens (aged 60 and above) is expected to reach 227 million by 2036.
- Many elderly people in India do not have financial support after retirement, especially those who worked in informal jobs.
- A Universal Pension Scheme will help reduce poverty among the elderly and ensure financial security.
3. Creating a More Inclusive Social Security System
- Countries like the US, Canada, Russia, China, and European nations have well-developed social insurance systems that provide pensions, healthcare, and unemployment benefits.
- In India, social security is mainly available through:
- Provident fund contributions (for salaried employees).
- Old-age pensions (for low-income groups).
- Basic health insurance schemes.
- This new pension scheme aims to bridge the gap by providing a reliable retirement plan for all Indian citizens.
Conclusion
The Universal Pension Scheme is a major initiative by the Indian government to provide financial security to all citizens, especially those in informal jobs. By merging existing pension schemes into a single system, the government aims to make retirement planning easier and more accessible for everyone.
This scheme will help millions of unorganised workers, traders, and self-employed individuals secure their future. It will also ensure that India’s growing senior citizen population has adequate financial support in old age.
As discussions continue, the government will finalize the plan, seek public feedback, and work towards implementing the scheme in the coming years.
