Securing Old Age

Abstract

Pension system aims on poverty release, consumption smoothing, and insurance coverage in respect of ageing population. In India, most of the old age citizens are not covered under any social security program. A miniscule number of Government employees and few private sector workers retire with pensions. Majority of the total workforce is engaged in the unorganised sector with no access to old age income security. The issue of old-age security is gaining importance and it is now high on the public policy agenda. The developed countries generally provide pension to those who contribute for pension whereas in majority of the developing countries pensions are provided in a discretionary manner which reduces the coverage of pension. The article discusses the need for a universal pension scheme that will help the working population in the unorganized sector with increased coverage of pension.

Key words: Pension scheme, Old age, social security

Introduction

The increased rate of the aged people in the total population has created a substantial demand for old-age social security. Thus it has become important to provide social security to its elderly people. Pension is one of the major component of old age social security. Developed countries have a good pension system with highly organised formal labour markets. Indian old-age income security is not well developed.

India, being a welfare State, has taken upon itself the responsibilities of extending various benefits of Social Security and Social Assistance to its citizens. As per the reports out of an estimated work force of about 397 million, around 28 million workers are having the benefit of formal social security protection in India. Rest of the workers are in the unorganised sector.

A well organised social security system for the workers in the unorganised sector will help in improving productivity, contribute to the harmonious labour relations and thus contribute to socio and economic development.

Social security is a system of protection of individuals who are in need of such protection by the State as an agent of the society. Such protection is relevant in contingencies such as retirement, resignation, retrenchment, death, disablement which are beyond the control of the individual members of the Society.

The current study attempts to examine the need for a universal social security and pension scheme. And a non-contributory pension scheme can guarantee a regular income in old age to all residents of the country, regardless of their earnings or occupation. It explains the scope for implementing a universal pension scheme which will increase the pension coverage and ensures proper income security to the old.