After 5 years, pension plan for unorganised sector has only 5m subscribers

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Among many initiatives introduced by the Indian government was the flagship pension scheme for unorganized sector workers, known as the Pradhan Mantri Shram Yogi Maandhan (PMSYM) Yojana. Reports indicate that since its inception, the scheme has garnered only 5 million subscribers.

Upon knowing the number of people who have subscribed, doubts arise regarding the viability and effectiveness of the scheme in delivering the security that many pensioners in the unorganised sector anticipate. This data from the Maandhan portal, says that this milestone was crossed in April 2024.

In the fiscal year 2020, approximately 4.3 million individuals enrolled in the scheme, but FY21 saw a significant decline in new subscribers, with only 1,30,000 people joining. This trend continued into the FY22, with 1,61,000 new subscribers. Around 2,55,000 individuals exited the scheme during FY22, further diminishing the subscriber base.

With these challenges, the scheme managed to add nearly 600,000 new subscribers in FY24. However, this falls significantly short of the target enrolment of 10 million beneficiaries each fiscal year, starting from 2020-21. The discrepancy between actual enrolments and the set targets raises questions about the scheme’s effectiveness and its ability to attract and retain participants from the unorganized sector.

Pradhan Mantri Shram Yogi Maandhan Yojana (PMSYM)

The aim of the scheme is to help pensioners, any worker who opts to joins, if at the age of 29, is required to contribute Rs 100 per month until reaching the age of 60, whereas a worker joining at 18 must contribute Rs 55 monthly. The central government matches these contributions equally. The Life Insurance Corporation (LIC) of India serves as the fund manager for this scheme.

The experts anticipate slow adoption of the scheme, attributed to factors such as high inflation and the increasing cost of living. These economic challenges have made it difficult for unorganized workers to afford contributions to this voluntary pension scheme. With expenses rising due to inflation, individuals may struggle to allocate funds for long-term savings, such as pension contributions. The rising cost of living may force workers to prioritise immediate financial needs over saving for retirement, leading to reluctance or inability to participate in the scheme. As a result, despite its benefits, the scheme faces barriers in attracting and retaining subscribers from the unorganized sector.