Relevance: GS-2 (Welfare Schemes, Social Security), GS-3 (Inclusive Growth)
Source: The Hindu , LASI, RBI, Government Documents
India is entering a rapid ageing phase — over 153 million Indians are aged 60+ (2021), projected to reach 347 million by 2050. Ensuring income security in old age has become a central pillar of social protection.
Evolution of India’s Pension Architecture
Period / Year | Milestone | Key Features / UPSC Value |
| Pre-1990s | Civil Service Pensions | Non-contributory, fiscally heavy. |
| 1995 | National Social Assistance Programme (NSAP) | First national‐level non-contributory safety net for elderly (Indira Gandhi Old Age Pension). Brought under Article 41 (Directive Principles). |
| 2004 | New Pension System (now NPS) | Shift to defined-contribution for government employees; market-linked returns. |
| 2009 | NPS extended to all citizens | Strengthened financial inclusion for informal sector workers. |
| 2015–16 | Atal Pension Yojana (APY) | Micro-pension for informal workers aged 18–40; government co-contribution for early adopters. Covers over 6.6 crore subscribers today. |
| 2021 | e-Shram Portal launched | National database for unorganised workers (≈30 crore) enabling linkage with social security schemes. |
Major Pension Schemes in India
Scheme | Type | Key Features |
| Indira Gandhi National Old Age Pension Scheme (IGNOAPS) | Non-contributory | Support to BPL elderly (≥60 years); central + state share. |
| National Pension System (NPS) | Contributory | Market-based returns; Tier-I mandatory; voluntary for all citizens. |
| Atal Pension Yojana (APY) | Contributory | Guaranteed pension (₹1,000–₹5,000); targeted at informal sector. |
| Employees’ Pension Scheme (EPS-95) | Contributory | Mandatory for EPFO members; defined-benefit. |
Current Picture and Challenges
- India’s pension landscape remains fragmented, especially for the informal sector which covers ~75% of elderly employment (LASI 2017-18).
- Awareness gaps persist:
- 85% unaware of Senior Citizens Act benefits.
- 41.5% unaware of NPS.
- 85% unaware of Senior Citizens Act benefits.
- Pension adequacy low: only 24.2% of elderly receive any pension income (LASI).
- APY shows rising formalisation: over 80% enrolments from low-income households.
Q. Consider the following statements about the National Pension System (NPS):
- It is a purely defined-benefit pension system backed by guaranteed returns.
- It is mandatory for all Central Government employees who joined service after 2004 (except armed forces).
- It allows individual subscribers to choose among different pension fund managers.
Which of the statements given above is/are correct?
A. 1 and 2 only
B. 2 and 3 only
C. 3 only
D. 1, 2 and 3
Correct Answer: B (2 and 3 only)
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