Actuarial valuation of unorganised sector pension scheme in offing

Proposal requires estimating liability on account of benefit under the PM-SYM scheme

The Labour Ministry is set to appoint an actuary to conduct a valuation of assets and liabilities of the government's flagship pension scheme, Pradhan Mantri Shram Yogi Maandhan (PM-SYM) yojana, for the unorganised sector.

“The actuary will have to assess the long-term financial sustainability of the scheme by developing a financial model based on actuarial assumptions & analysis to determine the impact of suggested future changes envisaged to the pension scheme like reassessment/re-fixation of contribution rates, restricting benefits of scheme to subscriber and spouse only among others,” read a request for proposal (RFP) released by the ministry earlier this month.

The proposal also requires the actuary to estimate the liability on account of the benefit under the PM-SYM scheme guaranteed by the government after considering the provisions of gap funding made and to estimate the scheme’s corpus position to meet guaranteed pension liability from the period 2038-2039 on an annual basis.

The scheme has not gained the momentum the government anticipated, even after more than five years since its launch in March 2019.

The scheme was announced in the 2019 interim Union Budget and was intended to cover around 100 million people in the next five years. It was meant for workers in the age group of 18-40 years whose monthly income was Rs 15,000 or less and who have not joined schemes like Employee Provident Fund or Employee State Insurance Corporation.

“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 in the world,” then finance minister Piyush Goyal had said in his Budget speech.

According to the RFP, a total of 4.99 million workers had joined the scheme by the end of FY24 and it has accumulated a corpus of Rs 3,414 crore.

Earlier last year, responding to a query by the parliamentary standing committee on labour, ministry officials had listed the long-term financial commitment required by the beneficiaries, the sudden outbreak of the pandemic, the presence of Atal Pension Yojana covering unorganised workers and the provision of free pension by states like Rajasthan and Haryana as some of the reasons for the poor performance of the scheme.

“Currently, the ministry has appointed the Indian Institute of Public Administration (IIPA) for carrying out a third party evaluation of the scheme to identify the hurdles in scheme implementation. Scheme guidelines will be revised accordingly to cover maximum unorganised workers. The final report is awaited,” a labour ministry official said.