Pension scheme for unorganised sector logs 5 mn subscribers in 5 years

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The government’s flagship pension scheme for the unorganised sector workers—Pradhan Mantri Shram Yogi Maandhan (PMSYM) yojana, meant to create a universal social security system for the vast informal sector, has logged just over five million subscribers since its inception in March 2019, thus raising questions on the viability and effectiveness of the scheme in providing social security to the millions of workers.

The data collected from the Maandhan portal shows that the pension scheme crossed the five million subscriber mark in April 2024. While 4.3 million people had joined the scheme in financial year 20, merely 130,000 people had joined the scheme in financial year 21, followed by 161,000 subscribers in the subsequent financial year. Close to 255,000 people had exited the scheme in financial year 22, thus further deteriorating the subscriber base, and added nearly 600,000 subscribers in financial year 24.

This is against a target of enrolment of ten million beneficiaries in each of the financial years starting 2020-21.

The scheme was announced in the 2019 interim union budget by then finance minister Piyush Goyal and was intended to cover around 100 million people in the next five years, as all workers in the age group of 18-40 years whose monthly income is Rs 15,000 or less and are not under the ambit of other social security schemes like Employee Provident Fund/Employee State Insurance Corporation can join the scheme.

“It is expected that at least 100 million labourers and workers in the unorganised sector will avail the benefit of ‘Pradhan Mantri Shram-Yogi Maandhan’ within the next five years, making it one of the largest pension schemes of the world,” Goyal said.

Under the scheme, a worker joining the scheme at the age of 29 years has to contribute only Rs 100 per month till the age of 60 years, while a worker joining the scheme at 18 years of age has to contribute Rs 55 per month. An equal matching contribution is paid by the central government. The Life Insurance Corporation (LIC) of India is the fund manager to this scheme.

Experts attribute the slow uptake under the scheme to the high inflation and rise in the cost of living, which has made it difficult for unorganised workers to contribute to this voluntary pension scheme.

“Soon after the scheme was launched, millions of people lost jobs in the COVID pandemic-induced lockdown, making it difficult to contribute. Thereafter, the incomes of people in the vast unorganised sector have not risen much and the high inflation in the past couple of years has raised the actual cost of living, making it difficult for these workers to sustain the burden of monthly contribution under the scheme,” says labour economist Santosh Mehrotra.

Earlier last year, the labour ministry told the parliamentary standing committee on labour that the scheme is undergoing an evaluation by the Indian Institute of Public Administration (IIPA).

“Scheme guidelines will be revised accordingly to cover maximum unorganised workers. The final report is awaited,” labour officials have told the House panel.

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Pooja Gupta

CA Pooja Gupta (CA, ISA, having 15 years of experience. Educator and Digital Creator

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CA Pooja Gupta (CA, ISA, having 15 years of experience. Educator and Digital Creator

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