The evolution of pension reforms in India, Pg7

Key Highlights:

• India has over 153 million people aged over 60, projected to double to 347 million by 2050.
• The Indira Gandhi National Old Age Pension Scheme (IGNOAPS), launched in 1995, provides income to vulnerable older populations.
• Atal Pension Yojana (APY), introduced in 2015-16, is a contributory pension scheme for individuals aged 18-40.
• The New Pension Scheme (NPS) replaced the Old Pension Scheme (OPS) in 2004 for the formal sector.
• Labour Codes introduced a uniform definition of ‘wages’, ensuring basic pay is at least 50% of total earnings.
• The e-SHRAM portal was launched to create a national database for informal sector workers.

Detailed Insights:

• India's pension schemes have evolved from basic social assistance (IGNOAPS, OPS) to financial inclusion and investment (NPS, APY).
• APY allows monthly, quarterly, and half-yearly contributions, accommodating the seasonal income of the informal sector.
• NPS 2.0 offers 100% equity allocation and a flexible multiple scheme framework, attracting younger investors.
• A significant portion (42%) of individuals over 55 were unaware of NPS and its requirements as of 2017-18, according to LASI.
• e-SHRAM aims to integrate the informal workforce, but faces challenges in registration, awareness, and benefit disbursement.
• Registration for e-SHRAM requires Aadhaar linkage and a bank account, potentially excluding vulnerable individuals.
• A large percentage (63%) of the elderly population are not digitally literate, hindering their access to online resources like e-SHRAM.

Key Concepts Involved:

• Contributory Pension Scheme: A retirement plan where individuals contribute a portion of their earnings, often matched by employers or the government.
• Social Security: Government programs that provide assistance to individuals and families with health care, income, and other support.
• Financial Inclusion: Efforts to make financial services accessible and affordable to all individuals and businesses, regardless of their socio-economic status.