Review of Pension Schemes in India

Abstract

In an immensely populated country like India, as the years pass by the population is showing an increasing trend, and also the numbers of aged persons has been increasing at a faster pace. Therefore this backdrop leads to the prominence of the social security pension schemes, and the magnitude of the fund invested to reform the India’s pension system. Thus this paper tries to create a meta-analysis of the reasons and probable aspects behind the effectiveness of the pension schemes. The paper also provides an outline between the differences between organized and unorganized or informal sector as an important aspect to decipher the reason creating a backlog in the Indian pension system, this leads to the emergence of Life Insurance Corporation of India (LICI) as a sole proprietor to cover workers under the informal sector and private sector. Thus the core objective of the paper is to analyse the importance of LICI considering their pension schemes, and whether the effectiveness of the pension schemes (as operated by the central government) has a causal relation with the pension schemes run by LICI or not. Again, the a part of the paper provides a highlight on the active participation of government to create a structured pension scheme through Atal Pension Yojna, which was launched in the year 2015, during the budget planning of 2015-2016. The ideology of this paper starts with the existing features and details of Atal Pension Yojna. The motive of this scheme (as per the explanation provided by PFRDA) was to eradicate the old-age insecurity faced by individuals. The pension was designed in such a format that with an investment of only Rs 1000 (initial rate of premium, premium ranges from Rs 1000-Rs 5000) by individual within the age range of 18 years to 40 years, will lead to an accumulation of a lump-sum corpus that will be effective during old-age of the individuals. But there are few flaws that can be observed within the scheme, therefore, this paper also tries to create a meta-analysis about the structure of Atal Pension Yojna and also tries to provide a brief explanation on the probable flaws of the scheme.