India and China make legal provisions for old-age pensions

May 27, 20152:20 pm620 views
India and China make legal provisions for old-age pensions
The National Pension Scheme or New Pension Scheme (NPS) account can be opened on voluntary basis in India.

The International Labour Organisation (ILO) appreciates India and China, who along with other Asian countries have made exclusive provisions for legal coverage of old-age pension. Dating back into time, in 1990s only 10% of the working populace was legally covered then.

However by 2000, the numbers trembled but it soon picked up traction between 2000 and 2013 to double up number of employees legally covered for old-age pension schemes.

According to the global labour authority, the period between 2000 and 2013 saw maximum intensity in the Asian markets. Close to 18 countries in the region introduced labour reforms to increase pension coverage during this period.

The legal pension coverage in India jumped from less than 5% in 1990 to 33% in 2000 and more than 80% in 2013, according to this report.

Voluntary affiliation to this new pension scheme was made available to Indian citizens in 2009. The National Pension Scheme or New Pension Scheme (NPS) got operational for state government and public sector employees on 1 January 2004. However, since May 1, 2009 all Indian citizens in the age group of 18-55 can open an NPS account on voluntary basis.

“This expansion was largely supported by the development of non-contributory pension and by the introduction of legislation allowing voluntary affiliation to contributory schemes. The two largest countries in the Asia region, China and India, provide important examples,” ILO said in the report titled World Employment and Social Outlook 2015.

China started process of extension of pension coverage in 2009, according to ILO and the country aims to achieve universal coverage by 2020. According to a labour ministry official, over the past few years, social security schemes like the Employees Pension Scheme (EPS) have caught the eyes of the government.

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According to an ILO report on social security, “The strong positive impacts of social protection have brought the expansion of old-age pensions to the forefront of the development agenda. Social protection is a key element of national strategies to promote human development, political stability and inclusive growth.

Most middle-income countries are boldly expanding their social protection systems, thereby contributing to their domestic demand-led growth strategies: this presents a powerful development lesson.”

According to a new annual flagship report, entitled The Changing Nature of Jobs reveals findings, “Only one quarter of workers worldwide is estimated to have a stable employment relationship. The remaining three quarters of workers are employed on temporary or short-term contracts, in informal jobs often without any contract, under own-account arrangements or in unpaid family jobs.”

Another recent trend is the rise in part-time employment opportunities especially among women in major developed countries between 2009 and 2013. “The shift we’re seeing from the traditional employment relationship to more non-standard forms of employment is in many cases associated with the rise in inequality and poverty rates in many countries,” added Ryder.

“What’s more, these trends risk perpetuating the vicious circle of weak global demand and slow job creation that has characterized the global economy and many labour markets throughout the post-crisis period,” said ILO Director-General Guy Ryder.

“The key issue is to match regulation to an increasingly diversified labour market,” said Raymond Torres, Director of the ILO Research Department and lead author of the report. “Well-designed regulations can support both economic growth and social cohesion.”

Further findings reveal at a global level, 52 per cent of employees are currently affiliated to a pension scheme, compared with 16 per cent those who are self-employed.

See also: More can be done to address foreign workers’ social, emotional needs: NGOs

Image credits: india.gov.in

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