Atal Pension Yojana

The share of informal workers in total employment in India varies between 80% and 90% depending on the coverage and methodology of estimation. Living conditions of a majority of the elderly population who are working or have worked in this sector are a matter of serious policy concern. What is more important is that the share and numbers of the elderly in the population is increasing at a high rate. Unfortunately, most of the pension schemes or funds for old age in India are for the workers in the formal sector, or a small segment of professionals who can subscribe to self-funded schemes. The Atal Pension Yojana (APY), initiated in 2015 and administered by the Pension Fund Regulatory and Development Authority (PFRDA), is a major initiative of the present government. It is a specifically designed model of the National Pension System (NPS) to bring the NPS within easy reach of the economically disadvantaged sections of the society.

There are a few other schemes such as the Indira Gandhi National Old Age Pension Scheme (IGNOAPS), the Public Provident Fund (PPF), and Unit Trust of India (UTI) Retirement Benefit Pension (RBP), through which informal workers can access financial support in their old age. These schemes, however, have their limitations and are restricted in terms of coverage. The IGNOAPS provides for a small amount of pension and does not reach the intended beneficiaries due to the inadequacies in the distribution system. For the PPF, the funds can easily be diverted and the term of deposit (15 years) is too short for younger workers. The UTI RBP is relatively new and has encountered regulatory challenges. It is difficult to assess whether clients will continue contributing to it in the future. Any option to withdraw all or most of the money before retirement can undermine the scheme’s usefulness for old age as immediate needs take precedence (Mukherjee and Piggot 2013).