Addressing the issues faced by Old Age Population - II

Click here for part-I of the issue

What is the issue?

• India has a serious problem of growing elderly population.
• India lacks in policy measures to address the problems of elderly.

What is the status of dependent population in India?

• According recent estimates 45 per cent of elderly males and 75 per cent of elderly females are currently fully dependent on others.
• India’s ageing population is expected to grow at more than double the rate of the general population.
• By 2050, India will have 21.16 per cent of the population above the age of 60 as compared to 60.34 per cent aged between 15 and 59 years.

What are the problems with Indian pension industry?

• India spends only 1.45 per cent of its GDP on social protection, among the lowest in Asia, far lower than China, Sri Lanka, Thailand, and even Nepal.
• India has an immature pension industry and a mere 7.4 per cent of the total Indian population is covered under any form of pension plans, which is alarming.
• Almost 85 per cent of Indian labour is still deployed in the informal sector, mostly as daily wage workers.
• It is extremely difficult to cover informal sector employees under a national pension scheme.
• People are also reluctant towards investing any part of their income over a large period of time.

How a micro-pension can address this concerns?

• Micro-pension is a personal retirement savings plan, in which People save a small part of their income individually during their working life that is invested collectively to generate periodical returns.
• When people retire their accumulated capital is paid out in monthly amounts.
• Such a scheme would balance between economic viability and generation of adequate returns for the participants
• Government for its part can offer a degree of financial flexibility to the low-income communities for low or no minimum contribution requirements in order to encourage membership to such micro pension schemes.
• In order to facilitate frequent deposits by the low- income groups, convenient door-to-door deposit collection can be organised by the government.

Source: Business Line

Quick fact

What are the existing schemes for old age population?

• Pradhan Mantri Vaya Vandana Yojana –PMVVY is a Pension Scheme for the senior citizens aged 60 years and above.
• Scheme provides an assured return of 8% p.a. payable monthly for 10 years which is payable at the end of each period,as per the frequency chosen by the pensioner at the time of purchase.
• The scheme is exempted from Service Tax/ GST.
• Loan upto 75% of Purchase Price shall be allowed after 3 policy years to meet the liquidity needs.
• Loan interest shall be recovered from the pension instalments and loan to be recovered from claim proceeds.
• There shall be no exclusion on count of suicide and full Purchase Price shall be payable
• New Pension Scheme (NPS) - It was aimed for giving people a route to avail a pension after they are retired or as a senior citizen.
• Government employees already enjoy pension, and this new scheme was introduced to enable the people from unorganised sectors to enjoy the benefits of pension.
• A contribution of a certain amount is made every month during the years when an individual is actively working.
• The money can then be withdrawn at a minimum age of 60 years.
• The NPS is slowly gaining popularity and expects huge enrolment from the informal labour segment.
• This scheme is not to be confused with National Pension System (NPS).
• Rashtriya Vayoshri Yojana - It is a scheme for providing Physical Aids and Assisted-living Devices for Senior citizens belonging to BPL category.
• The devices will help the Senior Citizens to overcome their age related physical impairment and to lead a dignified and productive life with minimal dependence on care givers or other members of the family.
• This is a Central Sector Scheme, fully funded by the Central Government, The expenditure for implementation of the scheme will be met from the "Senior Citizens' Welfare Fund".