Pension plan for unorganised sector sees only 5 mn subscribers in 5 years

Experts attribute the slow offtake under the scheme to high inflation and rise in cost of living

The government’s flagship pension scheme for unorganised sector workers — Pradhan Mantri Shram Yogi Maandhan (PMSYM) yojana — saw just over 5 million subscribers since its inception in March 2019.

This has raised questions on the viability and effectiveness of the scheme in providing social security to millions of unorganised sector workers.

Data collected from the Maandhan portal shows that the pension scheme crossed the 5-million subscriber mark in April 2024.

While 4.3 million people had joined the scheme in FY20, merely 130,000 people were inducted in FY21, followed by 161,000 subscribers in the subsequent financial year. Around 255,000 people had exited the scheme in FY22, thus further deteriorating the subscriber base. It added nearly 600,000 subscribers in FY24. This is against a target enrolment of 10 million beneficiaries in each of the financial years, starting 2020-21.

The scheme was announced in the 2019 interim Union Budget by the then finance minister Piyush Goyal 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 did not join 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,” Goyal had said.

Under the scheme, a worker joining the scheme at the age of 29 has to contribute only Rs 100 per month till the age of 60 years, while a worker joining the scheme at 18 has to contribute Rs 55 per month. An equal matching contribution is paid by the central government. The Life Insurance Corporation (LIC) of India is the fund manager to this scheme. Experts attribute the slow off-take under the scheme to the high inflation and rise in cost of living. These have made it difficult for unorganised workers to contribute to this voluntary pension scheme.

“Soon after the scheme was launched, millions of people lost their jobs during the Covid lockdowns, making it difficult to contribute. Thereafter, the income of people in the vast unorganised sector has not risen much and the high inflation in the past couple of years has raised the actual cost of living. This made it difficult for these workers to sustain the burden of monthly contribution under the scheme,” said labour economist Santosh Mehrotra. Last year, the labour ministry told the Parliame­ntary Standing Committee on Labour that the scheme is undergoing an evaluation by the Indian Institute of Public Administration (IIPA).

“Scheme guidelines will be revised accordingly to cover the maximum number of unorganised workers. The final report is awaited,” labour officials have told the House panel.