Workers from the informal economy and the agricultural sector should be allowed flexible contributions and withdrawals from pension plans due to the vagaries of their incomes and the risk of disasters, a report by the Pension Fund Regulatory and Development Authority said.
The ‘Financial Security for India’s Elderly’ report by PFRDA and Crisil also recommended a specific pension scheme for young women along the lines of the government’s Sukanya Samriddhi Scheme for young girls.
“There are labourers who work on a daily basis and are unsure of whether they would be employed the next day,” according to the report. “Also, agriculture sector employs the highest population in India and is highly dependent on monsoons. In a year of bad monsoons, the earnings of many of the farmers are very low even to suffice their basic needs, let alone put something aside for pension in later years.”
“Given such irregularities in income, flexible contributions could be allowed,” the report added. “Similarly, in case of extreme events such as floods, drought or severe financial hardships, the subscriber could be allowed to make flexible withdrawals.”
Since women, who account for 70% of the non-workers in India, are financially dependent on their male counterparts, and generally outlive men, the ‘feminisation’ of the elderly is going to be increasingly evident in the years to come, and could bring with it huge fiscal burdens. “Similar to a Sukanya Samriddhi Scheme, where parents are incentivised to save for their young daughters, a scheme can be provided for the young ladies.”
the report said. “The contributions could be from the women’s families. Alternatively, the government could look at providing some tax relief to the savings held in the form of pension. This segment, if tapped properly, can ensure high coverage of the working age population (15-59 years).”
