“Uttar Pradesh’s pension scheme for unorganized sector workers aims to provide financial security with a minimum assured pension of Rs 3,000 monthly after age 60. Despite challenges like low enrollment and income limits, recent proposals to expand eligibility and enhance benefits signal a push for inclusivity.”
Pension Security for UP’s Unorganized Workers: Challenges and Reforms
The unorganized sector in Uttar Pradesh, comprising nearly 88% of the state’s workforce, includes daily wage earners, street vendors, rickshaw pullers, and construction workers. These workers, often earning less than Rs 15,000 per month, face financial insecurity in their old age due to the lack of structured pension systems. The Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM) scheme, launched in 2019, was designed to address this gap, offering a minimum assured pension of Rs 3,000 per month after age 60 for eligible workers aged 18-40 who contribute between Rs 55 and Rs 200 monthly, matched by the government.
As of November 2024, Uttar Pradesh has enrolled over 6.36 lakh workers under PM-SYM, a fraction of the state’s estimated 38 crore unorganized workforce. The scheme’s uptake has been hampered by its rigid structure, requiring fixed monthly contributions that do not align with the irregular incomes of daily or weekly wage earners. In 2023, 21% of PM-SYM subscribers dropped out within six months, citing financial strain. The Atal Pension Yojana (APY), another scheme for unorganized workers, also struggles, with 82% of subscribers opting for the minimum pension of Rs 1,000 per month, deemed insufficient for rising living costs.
Recent discussions within the Ministry of Labour and Employment indicate potential reforms to make PM-SYM more inclusive. Proposals include raising the enrollment age limit beyond 40 years and increasing the income ceiling above Rs 15,000 to cover more workers. Additionally, integrating benefits from schemes like Pradhan Mantri Suraksha Bima Yojana (offering disability and death cover) and Pradhan Mantri Jeevan Jyoti Bima Yojana (term insurance) could create a comprehensive social security package. The ministry is also exploring partnerships with India Post Payments Bank and other financial institutions to streamline enrollments, moving beyond reliance on Common Service Centres (CSCs).
Technology is being eyed as a game-changer. With many unorganized workers, particularly younger gig and platform workers, being tech-savvy, mobile apps and aggregator platforms could simplify registration and contributions. For instance, Indonesia’s BPJS Ketenagakerjaan model, where aggregators facilitate social security for gig workers, is being studied for adaptation in India. Such innovations could boost enrollment in Uttar Pradesh, where reverse migration and income loss during the pandemic led to a sharp decline in registrations, dropping to an all-time low of 12,500 in July 2020.
The Economic Survey 2023-24 highlighted the growing pension crisis, projecting that India’s elderly population will outnumber children by 2046. In Uttar Pradesh, where poverty among the elderly is acute, with 40% in the lowest wealth quintile, the need for robust pension systems is urgent. Current schemes like PM-SYM and APY offer pensions of Rs 3,000 to Rs 5,000 after decades of contributions, but these amounts are not inflation-linked, unlike the Unified Pension Scheme (UPS) for central government employees, which guarantees a minimum Rs 10,000 monthly pension with inflation adjustments.
To address these gaps, experts suggest flexible contribution models, such as government-matched incentives for consistent savings, similar to Indonesia’s approach. For instance, matching contributions for the first six months could encourage long-term participation. Uttar Pradesh, with its vast unorganized workforce, stands to benefit significantly from such reforms, potentially setting a model for other states. However, challenges like lack of awareness, bureaucratic hurdles, and the absence of a fixed address for many workers continue to impede progress.
Disclaimer: This article is based on information from government reports, the Economic Survey 2023-24, and news sources like The Economic Times, The Hindu BusinessLine, and LiveMint. Data reflects the latest available figures as of November 2024. Readers are advised to verify details with official sources for the most current updates.