India's pension fund regulator has recommended the federal government introduce a UK-like pension scheme for the country's gig workers, a move aimed at bringing about 90 per cent of the overall workforce into the pension fold, its chairman told Reuters.
The Pension Fund Regulatory and Development Authority (PFRDA), which manages over $102 billion in assets, has proposed that workers at food and cab aggregators be automatically enrolled into the National Pension Scheme (NPS), Chairman Supratim Bandyopadhyay said in an interview on Tuesday.
The PFRDA regulates the NPS, India's voluntary retirement savings scheme that was started in 2004 and now has 16.7 million subscribers, including from the government and private sectors as well as from parts of the unorganised sector.
The PFRDA has recommended that employers deduct a part of their payouts to gig workers' and contribute that to the NPS scheme, said Bandyopadhyay. India's informal or unorganised sector employs about 90 per cent of the country's workforce, depriving them of social security benefits.
Rise in number
The number of gig workers, a large chunk of whom are delivery and sales personnel, is expected to reach 9.9 million in 2022-23, up about 45 per cent from 2019-20, according to a report by think-tank NITI Aayog released in June.
The PFRDA's recommendation to bring these workers into the pension fold replicates UK's pension system that mandates every employer, even those with just one employee, enrol their staff into a pension scheme and contribute towards it.
Currently, Indian law mandates only firms with more than 20 workers need to enrol in the Employee Provident Fund scheme, which requires contributions from both the employer and employees.
"This leaves a vast, unexplored area of the unorganised sector not covered under any pension scheme," said Bandyopadhyay. To make the NPS scheme attractive, the regulator has also suggested the government double the annual tax exemption for subscribers to ₹1 lakh, he said.
Going green
India plans to raise $1.93 billion through its first-ever issuance of sovereign green bonds this fiscal year. The PFRDA and its ten pension fund managers are keen to invest in these green bonds, said Bandyopadhyay.
"I believe you will see, when the guidelines come out, a lot of fund managers will be fighting for this (green bonds)," he said. "Being a long-term investor, we just cannot look away and say 'No, others will do it.' Our fund managers also have agreed to that."