Hello Lykkers! Informal workers are the unsung heroes of our economy, driving industries like agriculture, construction, domestic work, and street vending. Yet, when it comes to securing their future through contributory pension schemes, they face numerous barriers.

The Atal Pension Yojana (APY) and other initiatives aimed at providing old-age security haven’t seen widespread adoption, largely because informal workers find it difficult to afford these schemes.

Let’s explore why this happens and how the situation can improve.

Challenges in Affording Contributory Pensions

Most informal workers earn less than Rs 15,000 monthly, with their income often fluctuating. For them, contributing Rs 55 or Rs 100 per month might feel like a small amount on paper but becomes a significant burden in reality. Prioritizing essential expenses like food, rent, and healthcare often leaves little room for long-term savings.

Lack of Awareness and Financial Literacy

Many workers remain unaware of pension schemes or their benefits. Limited financial literacy prevents them from understanding the importance of securing their future. Without proper guidance, they often focus on immediate survival rather than planning for old age.

Documentation Issues

Eligibility for these pension schemes requires documentation such as identity proof and income certificates, which many informal workers lack. Even though the e-Shram portal has registered over 305 million workers to build a national database, many still face difficulties transitioning to contributory schemes.

Preference for Free Schemes

Informal workers often rely on government programs like the National Social Assistance Programme, which provide free pensions to senior citizens. These programs are more accessible and appealing compared to contributory schemes that demand regular payments.

Limited Flexibility in Schemes

Current schemes cater mostly to workers aged 18 to 40, excluding those above this age bracket who may want to secure a pension. Additionally, the absence of a provision for lump-sum payments to next of kin in case of early death reduces the appeal of such programs.

How Can Things Improve?

Experts recommend expanding the entry age for pension schemes to 50 years and merging contributory programs like APY with others, such as the Pradhan Mantri Laghu Vyapari Maan-Dhan Yojana. Direct benefit transfer (DBT) plans could eliminate the need for out-of-pocket contributions, making pensions more accessible to informal workers. Linking all social security schemes to the e-Shram portal would also streamline enrolment and ensure better targeting.

Lykkers, informal workers deserve accessible and affordable solutions to secure their old age. While contributory pension schemes are a step in the right direction, they need to be more inclusive, flexible, and tailored to the realities of these workers. By bridging the gap between policy and practicality, we can pave the way for a secure future for millions of unorganized workers.