Pensioners of a Lesser God

Pensioners of a Lesser God

Backdrop

The Main Opposition Party in India, the BJP on Wednesday 15^th January made a strong pitch for increasing the minimum pension to beneficiaries under the Employees Pension Scheme (EPS) to Rs 3,000 (US$ 50.oo) per month and link it to the price index. This is against the current proposal of the UP government of Rs 1,000 (US $ 16.6) proposed recently.  Under the EPS of the Employees Provident Fund Organization (EPFO), over 50 million EMPLOYED workers of the Organized Sector in India contribute 8.33% of their wages for provident fund and employers contribute the same amount to pension scheme, the government contributes only 1.16 per cent for the pension scheme. As a result, these employees on retirement, under certain conditions, receive a pension based on their pensionable service as well as pensionable salary.

Excluded Groups

While there are these Political Parties and Pressure Groups / Trade Unions etc. that can Fight for themselves and the employees in the organized sector as above, there is an 80% + work force in India in the Informal / Unorganized sector where there is no Employer Employee Relationship and hence they Lack employment security, work security and above all, SOCIAL SECURITY for Old Age. For this majority Informal sector workers that always remain Voiceless and Unrepresented in the form of Excluded Occupational (un)groups, there is no Provident Fund, No Pension and hardly any meaningful Insurance since they do not have any 'Mai Baap' - The Godfather. They remain the Children, nay (Non)Pensioners of a Lesser God who too would get old one day. This is the most vulnerable group that definitely requires Pension and Social Security more than anyone else since their working lives too are characterized with frequent breaks and uneven incomes, low wages (or earnings) and nil bargaining power etc. However, the problem is that no political group or pressure groups are batting for them as perhaps it lacks a fixed vote bank.  The large overlap between the poor and the group of informal workers was brought into public discourse by one of the early NCEUS (National Commission on Enterprises in the Unorganized Sector) reports which came out with the oft-quoted figure that 77 percent of the population spent less than Rs 20 per day in 2004-05.

NCEUS

The NCEUS (2004) of the first United Progressive Alliance (UPA) government was in accordance with its common minimum programme (CMP) that committed it “to ensure the welfare and well-being of all workers particularly those in the unorganized sector who constitute 93 percent of our workforce”. Under the chairmanship of the late Arjun Sengupta, the NCEUS published several detailed reports that have provided accurate measures of the size and magnitude of the unorganized sector and have highlighted the abysmal conditions prevailing there. It may not be incorrect to suggest that the credit for making the unorganized sector a part of contemporary public discourse falls, in large measure, on the NCEUS. The NCEUS highlighted the complete lack of growth of organized employment during the phase of rapid growth in India since the early 1990s. Virtually all the growth in employment since 1991 has been informal employment. This led the NCEUS to conclude that the growth process had bypassed the majority of the Indian population. To correct this distortion and to re-orient the growth process to serve the needs of the majority of the Indian working population, the NCEUS made many recommendations and urged some relevant legislation. Most of these suggestions were ignored by the government and the NCEUS along with its website was quietly folded up.

Micropensions as Social Security

Meanwhile, efforts were made by the Private organizations, Trade Unions, State Governments and GoI to provide for contributory and co contributory pension provisions for the unorganized sector workers. April 2006 witnessed the First Micro pension scheme in India where a private organization, Invest India Economic Foundation along with the UTI and Sewa Bank created an enabling, safe, secure and regulated environment for 30,000 low income informal sector women workers in Ahmedabad to start saving for their retirement. Their micro savings as low as a dollar a month was invested in a balanced fund, the UTI Retirement Benefit Pension Fund that provides steady growth over long term period. States like Rajasthan (Vishwakarma) , Andhra Pradesh (Abhyahastham) and Madhya Pradesh (Kushabha Thakre) announced, designed and started implementing co contributory micro pension schemes purely for the informal sector workers. While Rajasthan was the first state to implement Vishwakarma pension scheme along with a tunrkey implementation partner of Invest India Micro Pension Services, it became the first State in India where a matching contribution upto Rs. 1000.oo pa was provided by the state government to the workers of the pro poor twenty occupational categories who opened their pension savings accounts. The scheme soon gathered a momentum and was joined by more than 50,000 low income pro poor but informal sector workers.

http://www.business-standard.com/article/economy-policy/rajasthan-s-pension-scheme-for-unorganised-sector-draws-praise-108090801017_1.html

States showed the path to the central government and the GoI opened the NPS to the informal sector in 2009 and then added the co contributory benefit of Rs. 1000.oo pa to the informal sector workers under the Swawalaman scheme. Finally, for the informal sector workers, the GoI offered the SWAWALAMBAN benefit under the NPS lite that allows workers to save for old age by contributing Rs. 1000 - Rs 12000 pa and the GoI co contributes another Rs. 1000.oo pa in their NPS Lite Pension Account. The scheme is currently been announced for a specific time period only but motivates workers without any God Father (Mai Baap)  to create an upfront fully funded pension account.

Bell the Cat

Will the BJP et al also look into the issues of the informal sector workers and demand better terms and conditions as well as tenure for the Swawalamban? The Government ideally should also consider raising the tenure of Swalamban for at least 25 years and make it more attractive for younger workers to save for their old age. Can the PFRDA and the aggregators provide for greater intervention on pension literacy and popularize the same by making people understand the scheme? Can the Government plan to provide a Matching co contribution for anyone who contributes more than Rs. 500.oo pa? Can the government raise the co contribution limit to Rs. 1200.oo pa and also peg the co contribution with Inflation so that the GoI co contribution gets Raised Year after Year along with Inflation? There are many such issues where the PFRDA and the GoI can improve upon the NPS Lite - Swawalamban scheme and take the social security for Unorganized Sector Workers to its great heights, that has no parallel in the world.