DFS Secy Calls For A Review Of Rs 15,000 Salary Cap For Pension Enrolment To Ensure Adequate Retirement Corpus

The country needs to relook at the Rs 15,000 a month salary ceiling for mandatory pension enrolment to provide the social security net for people, a top FinMin official said on Tuesday.

It is "very bad" that some people, especially those in the private sector, who earn more than Rs 15,000 a month, do not have any pension cover and become dependent on children as they age, Department of Financial Services Secretary M Nagaraju said here.

"People who are earning less than Rs 15,000 a month, it is mandatory to enrol in the EPF (Employees Provident Fund) system, but for those earning more than Rs 15,000, it is not mandatory," Nagaraju explained.

"We need to look at it...how do we secure the future of those who earn a little more also, but have a secure future and not depend on the children in the time of old age," the official added.

In remarks at the CII Financing Summit here, Nagaraju termed this as an "inconsistency", which is different from the government's focus to ensure that maximum people are covered under pension schemes.

Nagaraju said the beneficiaries under the government-backed Atal Pension Yojana have touched 8.3 crore, and 48 per cent of them are women.

The government's efforts to ensure that more people, including those from the unorganised sector, get covered under social security measures will continue even in the future, he added.

Meanwhile, speaking at the same event, insurance regulator Irdai's member (life) Swaminathan S Iyer said amid growing consumer demand, it is a "challenge" to ensure that the younger generation has sufficient funds when they retire 30 years from now.

"With the growing consumerism, what can we do today to ensure that 30 years down the line, when they (Gen Z) retire, they have an adequate corpus in hand. That's the challenge that we all have," he said, adding that over two-thirds of Indians do not have life insurance.

Pointing out that the objective of opening up the insurance sector to private play 25 years back was to deepen the sector, he rued that over 85 per cent of the business for insurers comes from the urban areas, and the hinterland is still not adequately covered.

"We can't really reach 'insurance for all' by really concentrating on these areas (alone). We need ways and means to reach out to the rural areas and villages," he said, reminding the industry that not all people in the hinterland are poor.

Iyer said Irdai will work on standardisation of campaigns by companies so that citizens get a clear and consistent communication.