NPS-Lite: The Timing is Right
PFRDA Act 2013 was passed by the Indian parliament and received Presidential assent in September 2013. It declares the Pension Fund Regulatory and Development Authority (PFRDA) as a statutory body. Adoption of electronic KYC norms (Know Your Customer) by PFRDA for subscriber verification considerably speeds up the process of on-boarding new subscribers without having to resort to extensive paperwork. This holds particular relevance for low-income migrant workers who otherwise struggle to meet the stringent enrollment requirements of banks with regard to identity/address proof.
MicroSave has recently published a study that tracks the history of pension products for unorganised sector in India. It also provides a detailed analysis of the NPS-Lite implementations.
United Nations launches Global Income Security Index for Elders
In 2013, United Nations Population Fund (UNFPA) and HelpAge International devised a new multi-dimensional index that serves as a quantitative measure of the well-being of senior citizens in 91 countries. The “Global AgeWatch Index” considered 13 indicators covering income security, health, education, employment and enabling environment while ranking these countries.
India ranked #73 in terms of overall index value and #54 in the income security domain. Sweden which celebrated centenary of its universal pension scheme in 2013 topped the list followed by Norway, Germany, Netherlands and Canada.
World Bank Research on Matching Contributions for Pensions
The World Bank has published a comprehensive review of the international experience in the area of matching defined contribution (MDC) schemes for old-age pensions. The report discusses implementations in both developed and emerging economies and concludes that MDC schemes are moderately effective in increasing worker participation and raising individual contribution levels in pension programs in high-income settings. However, there is insufficient evidence to assess transferability of these results to lower-income and middle-income countries like India on account of greater vulnerability to everyday shocks, and in the absence of effective social risk management instruments to overcome these constraints.
The study observes significant scope for rigorous impact evaluation and innovative MDC designs that encompass better matching structures, advocacy measures and behavioral approaches to realize larger participation and savings effects in developing countries.
ILO on a Social Protection Floor for India
Prof. Ravi Srivastava at ILO-India Office explores the feasibility of a legislation-backed, entitlement-based social protection floor (SPF) for India in line with the guiding principles laid down by ILO Recommendation 202 on the key elements of a social security system. The study analyzed the financial costs in achieving an SPF across six dimensions of social security, namely, education, employment, pensions, health, housing and food. Prof. Ravi concludes that the costs of creating an SPF for India are quite modest and can result in a socially inclusive and sustainable growth.
The report also presents an overview of the existing social pension schemes in India. India’s state-assisted initiatives for the poor, that covers senior citizens, widows, and disabled persons, together serve ~2.5 crore beneficiaries. The National Old Age Pension scheme (IGNOAPS) offers Rs 200 per month to poor persons between 60-79 years of age and Rs 500 for those above 80.