The government of India is working on a reform that intends to bring all pension products under a singular regulatory framework. This move involves an integration of a grievance redressal system for all retirement financing schemes.
The goal here is to streamline governance, improve consumer protection, and expand retirement benefits to a large section of the population. According to a report by the Economic Times, the terms of reference for this proposed unified regulatory framework and the development of pension products are being finalised. Officials stated that the framework will examine “harmonising regulations to eliminate multiple supervisory overlaps”.
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Why the change?
For decades the pension landscape of the country has been fragmented wherein multiple government agencies oversee different schemes. This often leads to confusion and inefficiencies. However, the authorities are now keen to set up a common set of regulatory standards that would ensure good governance and a more effective grievance redressal mechanism.
Even though India has provident fund benefits under the Employees' Provident Fund Organisation (EPFO), a large section of the country’s workforce is still lacking pension coverage. Schemes like the National Pension System (NPS) remain voluntary, and the Employees Pension Scheme (EPS) under EPFO only applies to those who earn up to Rs 15,000 per month.
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This still leaves many workers without a structured retirement plan. A senior official involved in the discussion also stated that there is an urgent need to develop new pension products tailored to the diverse needs of India’s workforce.
“At present, a large section of workers are outside the purview of pension benefits, even if they are entitled to provident fund benefits under the EPFO,” an official told ET. He further added, "The proposed forum may also suggest measures to converge existing pension schemes under a unified body to enhance coverage and streamline implementation.”
A Coordinated Effort
The finance ministry is finalising the terms of reference for a dedicated forum which is going to oversee the regulator coordination and development of pension products.
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This forum is expected to bring better coordination with uniform regulations, eliminate supervisory overlaps, and further suggest ways to merge existing pension schemes under a single regulatory body.
Finance Minister Nirmala Sitharaman had also announced the creation of such a forum in her Budget 2025. She had underlined its role in standardizing supervisory reporting, enhancing consumer protection, and further boosting market development for pension products.
The officials believe that by aligning pension schemes under a single umbrella, the government will be able to:
- Bridge India’s pension gap
- Make retirement savings more attractive and accessible
The labour ministry has also begun discussions on a universal pension scheme, which could be voluntary and open to all, regardless of employment status.
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What’s on the Table?
This proposed framework might look at the consolidation of the following existing pension schemes under one umbrella;
Atal Pension Yojana
Pradhan Mantri Shram Yogi Maandhan (PM-SYM)
National Pension Scheme for Traders and Self-Employed (NPS-Traders)
Pradhan Mantri Kisan Maandhan Yojana (PM-KMY)
With a rapidly aging population and rising concerns for social security, India could help a lot with such initiatives that would bring a major shift in how retirement is planned by the citizens. As deliberations continue, the focus must remain on making pension benefits more inclusive.
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