Government plans Universal Pension Scheme: Who will benefit? Details here

The government is planning a Universal Pension Scheme that would allow people to contribute voluntarily and receive pension benefits after retirement, according to a report by The Economic Times.

The scheme aims to extend social security beyond traditional employment and provide a structured pension system for a larger section of society. The ministry of labour and employment is working on the proposed plan, which is expected to bring existing pension schemes under one framework, the report mentioned.

A senior government official quoted in the report said that the scheme will be open to all, as it will not be linked to employment. This means that anyone, including self-employed individuals and workers from the unorganised sector, can contribute and build their pension over time.

The Employees’ Provident Fund Organisation (EPFO) is developing the scheme, and once the framework is finalised, consultations will be held with stakeholders to ensure smooth implementation.

The plan is expected 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). Both these schemes currently offer a pension of Rs 3,000 per month after retirement, with contributions ranging from Rs 55 to Rs 200 per month, which the government matches.

The Atal Pension Yojana, which is currently regulated by the Pension Fund Regulatory and Development Authority (PFRDA), may also be included in the new scheme. The government is also looking into using the cess collected under the Building and Other Construction Workers (BoCW) Act to fund pensions for workers in the construction sector.

The Universal Pension Scheme is expected to benefit a wide range of people, including unorganised sector workers, traders, self-employed individuals, and other citizens aged 18 and above who want to secure pension benefits after turning 60.

The government may also encourage state governments to merge their pension schemes with this new initiative to increase pension payouts and avoid duplication of beneficiaries.

Many developed countries, including the US, Canada, Russia, China, and most European nations, already have structured social security systems that cover pensions, healthcare, and unemployment benefits. Countries like Denmark, Sweden, Norway, the Netherlands, and New Zealand provide universal pension schemes to ensure financial security for their elderly population.

At present, India’s social security system mainly relies on the provident fund system, along with old-age pension schemes and health insurance for targeted beneficiaries, particularly those below the poverty line. The proposed Universal Pension Scheme aims to expand coverage and create a more inclusive and sustainable pension system for the country’s workforce.