Universal Pension Scheme: What It Means And Who Will Benefit From It?

The new scheme will also be open to salaried employees and self-employed individuals. The goal behind the Universal Pension Scheme is to streamline the country’s pension and savings structure

The Employees’ Provident Fund Organisation is overseeing the development of the scheme

Source : ABPLIVE AI

Universal Pension Scheme: The government is working on a Universal Pension Scheme, which will allow individuals to make voluntary contributions and receive pension benefits upon retirement. According to several media reports, the Union Ministry of Labour and Employment is currently developing the initiative.

India already offers a range of pension schemes catering to different segments of society. How will this new scheme differ from existing ones? What current pension schemes are available? Will it replace the National Pension Scheme (NPS)?

What Is The Universal Pension Scheme?

The government is developing a Universal Pension Scheme that will be available to all citizens, including those in the unorganised sector, according to Labour Ministry sources cited by NDTV. Currently, individuals in the unorganised sector, such as construction workers, domestic staff, and gig workers, do not have access to major government-backed savings schemes.

The new scheme will also be open to salaried employees and self-employed individuals. The goal behind the Universal Pension Scheme is to streamline the country’s pension and savings structure, possibly integrating some existing schemes. It will provide a secure, voluntary savings option for all citizens.

The initiative aims to extend social security beyond traditional employment, providing a structured pension system to a broader section of society.

A senior government official told The Economic Times that the scheme would be open to all, as it would not be tied to employment. This would allow self-employed individuals and workers in the unorganised sector to contribute and gradually build their pension.

The Employees’ Provident Fund Organisation (EPFO) is overseeing the development of the scheme. Once the framework is finalised, discussions with stakeholders will be held to ensure smooth implementation, the report added.

A key difference between the proposed universal pension scheme and existing EPFO schemes is that contributions will be entirely voluntary, with no financial input from the government. The new scheme is expected to incorporate existing pension programmes such as the Pradhan Mantri Shram Yogi Maandhan (PM-SYM) and the National Pension Scheme for Traders and Self-Employed (NPS-Traders), which currently offer a monthly pension of Rs 3,000 after retirement. Contributions range from Rs 55 to Rs 200 per month, which are matched by the government.

The Atal Pension Yojana, regulated by the Pension Fund Regulatory and Development Authority (PFRDA), could also be included in this new framework. Additionally, the government is considering using the cess collected under the Building and Other Construction Workers (BoCW) Act to fund pensions for construction sector workers, according to ET.

The central government may also encourage states to merge their existing pension schemes into this unified initiative, ensuring a fair allocation of government funds, increasing pension benefits, and preventing overlap in beneficiary coverage.