The central government is working on a Universal Pension Scheme that aims to streamline and integrate existing pension programs under a single framework. This initiative will allow voluntary contributions, enabling individuals to build a retirement corpus and receive pension benefits, regardless of their employment status.

Objective and Scope of the Scheme

The primary objective of the Universal Pension Scheme is to extend social security beyond traditional employment. Unlike existing pension schemes linked to formal jobs, this initiative will be open to all citizens, including self-employed individuals and workers in the unorganised sector.

The Ministry of Labour and Employment is leading the project, with the Employees’ Provident Fund Organisation (EPFO) responsible for developing the framework. Once finalized, the government will conduct stakeholder consultations to ensure smooth implementation.

Integration with Existing Pension Schemes

The proposed scheme is expected to integrate several existing pension programs, including the Pradhan Mantri Shram Yogi Maandhan (PM-SYM) and the National Pension Scheme for Traders and Self-Employed (NPS-Traders). Currently, these schemes provide a monthly pension of Rs 3,000 upon retirement, with contribution amounts varying between Rs 55 and Rs 200 per month, which the government matches.

Additionally, the Atal Pension Yojana (APY), currently regulated by the Pension Fund Regulatory and Development Authority (PFRDA), may also be incorporated into the new framework. The government is exploring the possibility of utilising funds collected under the Building and Other Construction Workers (BoCW) Act to finance pensions for workers in the construction industry.

Who Will Benefit from the Scheme?

The Universal Pension Scheme will benefit a broad section of society, particularly those currently excluded from structured retirement benefits. Eligible individuals include Self-employed individuals, Unorganised sector workers, Traders and citizens aged 18 and above who wish to secure pension benefits post-retirement.

Furthermore, the government is considering encouraging state governments to merge their pension schemes with the Universal Pension Scheme. This integration would enhance pension payouts and reduce redundancy in beneficiary lists.

Comparison with Global Pension Models

Many developed nations have structured social security systems that encompass pensions, healthcare, and unemployment benefits. Countries such as the United States, Canada, Russia, China, and several European nations already provide comprehensive pension programs. Nations like Denmark, Sweden, Norway, the Netherlands, and New Zealand have universal pension systems that ensure financial stability for their elderly population.

Current Social Security System in India and Expected Impact

India’s existing social security system primarily depends on the Employees’ Provident Fund (EPF), along with targeted old-age pension schemes and health insurance initiatives, particularly for economically weaker sections. However, these programs do not provide universal coverage, leaving a significant portion of the workforce without pension security.

The Universal Pension Scheme aims to bridge this gap by creating a more inclusive and sustainable pension system, ensuring financial stability for a larger section of the population in their retirement years. Once implemented, this scheme could mark a significant step toward strengthening India’s social security framework.