Overview of Pension Framework Reforms
The government is planning to establish a common regulatory and supervisory framework for all retirement financing schemes, alongside developing a grievance redressal mechanism. This initiative aims to bridge India's pension gap.
Objectives of the Proposed Forum
The forum's terms of reference are being finalized to focus on regulatory coordination and the development of pension products. Key objectives include:
- Harmonizing regulations to eliminate supervisory overlaps.
- Ensuring common regulatory standards for good governance.
- Developing a redressal mechanism for grievances.
- Combining different pension schemes managed by various central agencies.
Challenges in Current Pension Coverage
- A large segment of workers lacks pension coverage, despite being entitled to provident fund benefits under the Employees' Provident Fund Organisation (EPFO).
- The National Pension Scheme is voluntary, and the Employees’ Pension Scheme under EPFO is not mandatory for wages above ₹15,000 per month.
Proposed Reforms and Initiatives
- The forum may suggest measures to unify existing pension schemes and enhance coverage.
- Finance Minister Nirmala Sitharaman announced a forum to develop common supervisory reporting, consumer protection standards, and market initiatives.
- The finance ministry noted existing regulatory overlaps reduce pension attractiveness, emphasizing the need for consistency and market support.
Universal Pension Scheme
The government is contemplating a universal pension scheme to provide social security for the growing elderly population. The scheme could be:
- Voluntary and contributory, not tied to employment.
- Merge existing schemes like the Atal Pension Yojana, Pradhan Mantri-Shram Yogi Maandhan Scheme, National Pension Scheme for Traders and Self-Employed, and Pradhan Mantri Kisan Maandhan Yojana.
