The Indian government is planning on a Universal Pension scheme that will allow all people to contribute and secure their retirement income, including workers from the unorganized sector, self-employed, etc.
Multiple media reports are saying the Ministry of Labour and Employment is working on this plan to make a structure that meets the objectives of this initiative. The workers wondering about the Universal Pension scheme can learn everything about it here.
India Universal Pension Scheme
Multiple media platforms reported that the central government has started to work on a Universal Pension scheme for all Indians and let them contribute voluntarily for a stable retirement income in the future. The government has taken this initiative with the goal of offering retirement financial stability to all citizens regardless of which sector they are working in.
The Indian government has not revealed the details of the scheme yet as it is still in the working phase. According to reports, the scheme will not replace the current national pension scheme; rather, it will integrate new policies or schemes into the current system to make it more flexible for all Indian citizens.
As per reports, the citizens can expect it to be titled as New Pension Scheme. The Ministry of Labor and Employment has started working on its proposal document and once it is done the Union government will organize a stakeholder organization to understand the dynamics, analyze the scheme impacts, and other aspects to make it reliable for all Indian citizens.
How will the India New Universal Pension Scheme work?
As we have mentioned, the government has not released much about the new pension scheme, but the government is trying to bring the existing pension scheme and benefits under one framework to make it accessible to everyone. According to reports, let’s see how the proposed scheme will work:
- The new pension scheme will be beyond traditional employment and it will be open for everybody regardless of their employment. Anyone who wishes to save or build income for their retirement will be able to contribute to the scheme.
- The government may integrate the current schemes, such as the National Pension scheme, and the Pradhan Mantri Shram Yogi Maandhan (PM-SYM) scheme, and make a universal scheme for all.
- The Atal Pension Yojana managed by the Pension Fund Regulatory and Development Authority can also be merged into the new pension scheme.
- The government may use the funding from the Building and Other Construction Workers (BoCW) Act for construction workers’ pensions to ensure financial security for these workers too.
- The new pension scheme is different from the existing schemes because, in the new scheme, the citizens can voluntarily contribute to their retirement, whereas the government will not make any contributions to their retirement savings.
Who will get the benefit from the India Universal Pension Scheme?
As we mentioned above, the new pension scheme will be beyond employment, so with the universal pension scheme, the people who would get the most benefit will be workers from the unorganized sector, self-employed individuals, traders, and other citizens who are above 18 and wish to save money for their pensions.
The national pension scheme is generally available for workers in the government or private sector. However, some people, such as construction workers, wish to save money for their retirement but can’t access such schemes. With one universal scheme, they can access the scheme and build their retirement income.
The central government may entrust the state government to combine this new scheme with their pensions to increase the retirement benefit and avoid any duplication of recipients. This way people who wish to secure a pension for their retirement can easily save money. According to reports, many countries like Canada, China, the US, and others have one social security system that covers the retirement income of the citizens.
What would be the impact of the Universal Pension Scheme?
The government has proposed the Universal Pension Scheme and began the work on a proposal document as to come up with something like this would need permission from parliament, and other stakeholders to execute the government vision. After the consultation, the Ministry would work on making it better as per the stakeholder’s advice.
However, based on the government’s vision, the universal pension scheme will impact and benefit many lives in the following ways:
- The government believes the senior population will reach 227 million by 2036 and with this scheme, they would have financial stability during their retirement days.
- The current system generally involves EPFOm health insurance, and old-age pensions for retirees, however, with the new pension scheme the government is moving towards a sustainable system where everyone has financial stability during their retirement days.
- The flexibility to voluntarily contribute for retirement can encourage people to save money for their retirement and move to financial security.
- Though the government may not contribute under the new scheme, as the existing schemes will be integrated, it may make the government running system better and more efficient.
The current pension schemes are limited to EPF and NPS, leaving a large workforce, especially unorganized sector workers. The New pension scheme will include all the workforce in Social Security which is a great vision, however, it is yet to come on paper completely, so let’s see when the government will come up with a detailed proposal.