Rethinking Pension Policies: Bridging the Security Gap

The Indian government is urged to reconsider the Rs 15,000 monthly salary ceiling for mandatory pension enrolment to enhance social security. Current inconsistencies leave many private sector employees without coverage, pushing them to rely on their children during old age. The government is focusing on expanding pension schemes.

In a significant policy discussion, a top official from India's Ministry of Finance has called for a reassessment of the Rs 15,000 salary ceiling for mandatory pension enrolment. The current framework is criticized for not covering many private sector workers who earn above this threshold, raising concerns about their financial security in old age.

The Department of Financial Services Secretary, M Nagaraju, expressed dissatisfaction with the current pension system, which mandates enrolment for those earning less than Rs 15,000 monthly, but does not extend the same obligation to higher earners. This lack of coverage forces many to depend on their offspring during retirement.

Speaking at the CII Financing Summit, Nagaraju highlighted the inconsistency in the government's approach to pension schemes, which aims to cover as many citizens as possible. Alongside, insurance regulator Irdai's member, Swaminathan S Iyer, stressed the need for greater insurance penetration, especially in rural areas, as a growing challenge amid rising consumer demand.

(With inputs from agencies.)