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Informist, Thursday, Apr. 3, 2025

 

--Banking secy: Hope govt will develop unified pension plan beyond govt staff

--Banking secy: Despite efforts, pension savings in India lower than OECD avg

--Banking secy: Need pension pdts for gig workers, informal sector

--Banking secy: Large part of population remains out of pension coverage

--Jr finance minister: Have to take pension products to grassroots level

--Jr finance minister: Need to bring global best practices to pension sector

--Jr finance minister: Need to develop pension pdts for last-mile coverage

 

NEW DELHI – As part of the government's efforts to improve pension coverage in India, the Pension Fund Regulatory and Development Authority, along with the private sector, should develop newer products designed for gig workers and the informal sector, Department of Financial Services Secretary M. Nagaraju said Thursday. Irrespective our efforts, large part of the population remains out of pension coverage, Nagaraju said while speaking at 1st International Research Conference on Pension, organised by PFRDA and Indian Institute of Management Ahmedabad. 

 

Currently, India's pension savings is much lower than the the average pension savings of Organization for Economic Co-operation and Development countries, the banking secretary added. Particularly, he said that PFRDA should work on products that are aimed at women who, in many parts of the country, lack social security. 

 

PFRDA Chairperson Deepak Mohanty, in his address, said that the need for improved pension coverage in the country is "of utmost importance" as lack of old age coverage eventually leads to fiscal strain. "So pension expansion is not just important for individuals but for the developement of the country as well," he said. 

 

The total corpus of various schemes under the National Pension System and Atal Pension Yojana increased 22.9% on year to INR 14.41 trillion as of March-end, a senior official at the Pension Fund Regulatory and Development Authority told Informist. In 2023-34 (Apr-Mar), the corpus grew 30.5% on year to INR 11.73 trillion.

 

Minister of State for Finance Pankaj Chaudhary, who was also at the event, said that the government should take pension sector to the grassroots level. And in that, private sector should do equal participation, working for the cause by leveraging technology, artificial intelligence and other global best practices. "We need to develop pension products for last-mile coverage," Chaudhary said. 

 

Nagaraju also mentioned the success of government's efforts to improve pension coverage and said that the Unified Pension Scheme is one of the examples of government's intent to launch more staff-friendly schemes. He added that more such initiatives should be deliberated upon for stakeholders beyond government employees.

 

Operational from Tuesday, the government announced the Unified Pension Scheme last year which aims to provide an assured pension, family pension, and an assured minimum pension for government employees. To address the demand for assured returns, the Cabinet decided to roll out this scheme, in which 50% of the average basic pay drawn in the last 12 months prior to superannuation for a minimum qualifying service of 25 years would be given as an assured pension. For those with less than 25 years but over 10 years of service, the assured sum would be a proportionate sum calculated on a pro-rata basis.

 

The scheme also assures family pension, under which 60% of the pension will be given to the immediate family after the demise of an employee. The third feature is an assured minimum pension, which is devised to address the issue of employees with government service for at least 10 years. Under this, 10,000 rupees will be given to such employees as a minimum assured pension. 

 

While employees' contribution to the Unified Pension Scheme will continue to be at 10%, the Centre's contribution will be raised to 18.5% from 14.0%. There is a provision that will allow the Centre to revaluate its contribution once every three years, but there is no opportunity to tweak staff's contributions.  End

 

Reported by Priyasmita Dutta and Sagar Sen

Edited by Deepshikha Bhardwaj

 

 

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