Govt eyes auto enrolment in pension scheme

The government is looking at mandatory enrolment of workers in the pension scheme when they join the organised sector workforce, while giving them the flexibility to decide their contribution, as part of e?orts to provide a social security net for millions of workers, a top government o?cial has said.

“There will be a system of auto enrolment and an employee can contribute INR100 ($1.40) while the employer can also contribute. People who are young today need to save for tomorrow,” Finance Secretary Rajeev Kumar said, according to a report in the Times of India.

In the Union Budget unveiled on 1 February, the government announced the plan, which will provide for inter-operability of schemes and provide safeguards for the accumulated corpus.

Currently, pension plans are sold by insurance companies, mutual funds as well as companies that operate under the National Pension System (NPS) regulated by the Pension Fund Regulatory and Development Authority. In addition, the Employees Provident Fund Organisation provides Employees Pension Scheme by transferring a part of the employee’s and employer’s contribution in addition to the Employees State Insurance Corporation.

The Finance Secretary said that the idea was to bring them all under one umbrella so that subscribers would not lose their money in the event they switched jobs.

Source: Asia Insurance Review