The Indian government is reportedly working on a Universal Pension Scheme, a voluntary initiative designed to provide retirement benefits to individuals across all sectors, including those in unorganised employment, traders, and self-employed individuals aged 18 and above. Unlike traditional job-based pension plans, this scheme will not be tied to any specific employment, making it accessible to a wider range of individuals.The Labour Ministry has already initiated discussions on the framework for the scheme, which is expected to integrate and simplify existing pension programs. Once the policy details are finalised, the government will seek inputs from key stakeholders to refine the plan before implementation.
 

Key Features and Scope of the Universal Pension Scheme

The government’s goal with this new initiative is to streamline and unify various pension schemes under a single system. The scheme is expected to incorporate several existing pension programs, ensuring wider accessibility and better financial security for retirees. These include:

• Pradhan Mantri Shram Yogi Maandhan (PM-SYM): This scheme provides a monthly pension of Rs 3,000 after the age of 60. Contributions range from Rs 55 to Rs 200, with an equal contribution from the government.
• National Pension Scheme for Traders and Self-Employed (NPS-Traders): A pension plan designed for small traders and self-employed individuals to secure financial stability in their retirement years.
• Atal Pension Yojana (APY): A structured pension scheme that may also be integrated into the Universal Pension framework.
• Building and Other Construction Workers (BoCW) Act Funds: The government is considering using funds from BoCW to provide pension benefits to construction workers, ensuring social security for a segment of workers that is often financially vulnerable post-retirement.

With these integrations, the Universal Pension Scheme aims to simplify pension management, make enrollment easier, and ensure a steady retirement income for millions of citizens.
 

Why India Needs a Universal Pension Scheme

India’s senior citizen population (aged 60 and above) is projected to reach 227 million by 2036, highlighting the urgency of a strong and inclusive pension system.

Many developed countries, including the US, Canada, Russia, China, and European nations, have established comprehensive social security systems covering pensions, healthcare, and unemployment benefits. In contrast, India’s social security network primarily consists of provident funds, old-age pensions, and government health insurance, which mainly benefit individuals below the poverty line.

A Universal Pension Scheme could help bridge the gap by offering structured retirement benefits to a broader segment of the population, including those in informal employment who currently lack financial security in old age.

The scheme is also expected to encourage voluntary retirement savings, ensuring that workers in the unorganised sector, self-employed professionals, and small traders can build a pension fund for themselves. By consolidating existing pension programs, the government aims to make the system more efficient, transparent, and accessible to every Indian citizen.

As discussions continue, the Universal Pension Scheme has the potential to reshape India’s pension landscape, providing a secure and sustainable financial future for millions of workers. This initiative could mark a significant step towards inclusive economic planning and long-term financial stability for retirees across the country.