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Introduction

India’s pension reforms have evolved to address the twin goals of inclusivity and portability in an increasingly dynamic labour market. While multiple initiatives have expanded access and digital linkages, their effectiveness in achieving universal and sustainable social security remains a matter for critical examination.

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Why recent reforms are sufficient to move toward a universal and portable social security system:

• Enhanced Digital Portability and Interoperability: Reforms like UAN (EPFO) and PRAN (NPS), along with digital tools such as e-KYC, Aadhaar linking, and DigiLocker, have enabled seamless transfer of accounts across employers and geographies.
  Eg: A worker shifting from a factory to a start-up can now retain the same NPS/EPF identity, ensuring continuity of contributions.
• Inclusion of Unorganized and Gig Workers: The Social Security Code, 2020 formally recognized gig and platform workers as beneficiaries, extending the contributory pension net beyond the formal sector.
• Expansion of Voluntary Micro-Pension Coverage: Schemes such as Atal Pension Yojana (APY) and NPS-Lite have increased voluntary participation, especially among low-income informal workers, ensuring basic old-age security.
  Eg: APY now covers more than 6 crore subscribers with a government-guaranteed minimum pension.
• Fiscal and Administrative Rationalization: The shift from OPS to NPS for government employees has curtailed unfunded pension liabilities and improved fiscal sustainability, while centralizing oversight under PFRDA has enhanced administrative efficiency.
  Eg: NPS assets under management crossed ₹12 lakh crore (2025), showing growing institutional trust and financial discipline.

Why recent reforms are NOT sufficient to move toward a universal and portable social security system:

• Limited Coverage of the Informal Sector: Despite APY and NPS-Lite, over 85% of India’s workforce remains outside formal pension coverage due to irregular incomes and lack of employer linkage.
  Eg: Daily wage earners and migrant construction workers rarely maintain consistent contributions because no mechanism ensures automatic enrolment or income-based deductions.
• Fragmented Institutional Architecture: Multiple agencies (EPFO, PFRDA, state welfare boards, and labour departments) operate in silos, creating overlap, confusion, and weak data portability.
• Inadequate Pension Corpus and Benefit Levels: Low and irregular contributions in schemes like APY yield insufficient pension benefits, often below subsistence levels, failing to ensure old-age adequacy.
  Eg: An APY subscriber paying ₹200 per month may receive only ₹1,000–₹2,000 monthly pension, far below living costs in urban areas.
• Gender and Gig Worker Gaps Persist: Women, self-employed, and gig workers remain structurally excluded due to career breaks, lack of employer contributions, and unclear aggregator compliance.
  Eg: The Social Security Code (2020) recognized gig workers legally, but the contributory framework and enforcement mechanism are yet to be fully implemented.

Necessary further structural changes

• Establish a Unified Social Security Identity (SSN-India): Integrate EPFO, NPS, APY, and state welfare schemes under one lifelong digital account to ensure true portability of contributions and benefits.
• Mandate Auto-Enrolment with Flexible Contributions: Introduce default enrolment for all workers (formal, informal, and gig) with graded or income-linked contributions and the option to pause or resume.
  Eg: Gig platforms could automatically deduct a small percentage of each transaction, toward pension savings, matched partially by the government.
• Introduce Gender- and Care-Sensitive Pension Credits: Recognize unpaid care work and interrupted employment by granting care credits and targeted government co-contributions for women and informal caregivers.
• Strengthen Governance: Create a medium-term fiscal framework for pensions to prevent OPS-type liabilities and establish a single regulatory coordination council for EPFO, PFRDA, and state agencies.
  Eg: Finance Commission grants could reward states achieving higher pension coverage and grievance resolution efficiency.

Conclusion

India has one of the largest workforces (~ 607.7 million in 2024) in the world, yet ensuring social security for all remains a major challenge. Moving toward universal and portable pensions is essential to uphold the spirit of welfare and strengthen the foundations of socio-economic rights.

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