Contributory Pension Schemes for the Poor: Issues and Ways Forward

The issue of old-age income security in India assumes significance in view of the expected rise in the elderly population in the years to come, problems of poverty and vulnerability among them and their limited coverage by the existing old age pension schemes. Schemes aiming to promote contributions from the poor unorganised workers for their old age security have been promoted by the government since 2010. By comparing and contrasting the design features of India’s two contributory pension schemes, NPS-Lite and APY, and discussing the strengths and limitations of each of these schemes in addressing the needs of low-income workers with the help of available data and studies, this paper argues that the design features of these schemes are such that they fail to take the specific characteristics of unorganised worker households into account. Also discussed is how the current design of contributory social security schemes can be improved to meet the pension requirements of unorganised workers.