Government working towards bringing informal sector under pension scheme, says Chairman, PFRDA

The informal sector in India, which comprises 88% of the workforce. However, currently only 3-4% employees in this sector have pension coverage which is also inadequate in terms of the escalating living and healthcare costs, "The govt. is working on plans to bring them under some sot of pension coverage," said Hemant G Contractor, Chairman, Pension Fund Regulatory and Development Authority (PFRDA), today at the first annual conference of FICCI on ‘Pensions Sector in India: Growth Opportunities and Challenges’.

"The government’s Atal Pension Scheme had received a good response and it had been able to attract many individuals from the lower strata of society," he added.

However, for people below the poverty line, who do not have the capacity to join a voluntary pension scheme, the government needs to create a social scheme that can provide security at old age.

Emphasizing the importance of the pension scheme, Contractor said, "In India 10% of the global senior citizens reside and with an increase in life expectancy this number would double in 15 years from now. Hence, it is imperative to bring about awareness regarding the existing pension schemes in the face of escalating living and healthcare costs to ensure a comfortable life once a person attains the age of 60 years."

PFRDA is working towards developing pension schemes that are flexible, portable and transparent in terms of financial implications. He added, "The sector needs to be regulated to safeguard the interest of the people from the lower income group."

On the occasion, G N Bajpai, Former Chairman-Securities and Exchange Board of India ( SEBI) and Life Insurance Corporation of India ( LIC), said that pension schemes in India like other financial products is a push product, of which a majority of the people are not aware about. He added that there was a lack of ownership about the customer as well. Once a person joins a pension scheme there is no agency accountable to attend to the needs and grievances of a customer. Also, the rate of return on pension schemes needed to be higher than the existing rates, which should be competitive with the world market rates.