Papad makers, labourers to get pension cover soon

‘‘Like the Finance Minister promised in his Budget scheme, the pension scheme would be in operation by July or August,’’ Joint Secretary in the Department of Economic Affairs Finance Ministry Ajit Sharan told The Indian Express.

The scheme requires a minimum monthly contribution of Rs 100 and collection of contributions would be carried out through multiple means and through a variety of entities like banks, post offices and NGO organisations.

The government’s contribution to the scheme would be nil and would return the savings of people as monthly pension when they are 60 after investing them in ‘‘safe instruments’’ Sharan said.

According to the IRDA report on the scheme, the funds would be invested in rated securities and there would be transparency in the system.

At present the aged get a mere Rs 75 from the Centre and state each as monthly pension under government social security schemes. The IRDA scheme is tailored to the needs of the informal labour force which constitutes 87 per cent of the workforce. It accepts the fact that this sector may not get a monthly salary all the time and is likely to be exposed to constant switching of jobs or even spells of joblessness. Besides that, it recognises the fact that this sector is growing at a rate of 1.4 per cent per annum which is twice as fast as the formal labour force.

‘‘Thus the new scheme should thus be flexible,’’ the report says. Recognising the fact that monthly contributions of Rs 100 may be difficult for many, there should be a provision for allowing small savings to accumulate in banks and then transfer these to the pension system. Banks, cooperative systems or NGOs would be asked to fill in as stop gap agencies to ensure payment of the necessary minimum amount.