PFRDA – Requirement of Auto enrolment in India
India has a huge unorganized or informal sector, around 83% of the workers are in informal employment where there is no formal employer – employee relationship. The job/ work arrangements are informal, not governed by any enforceable contract. Hence, the employees or workers are not covered under any kind of old age income security scheme. Further, a large number of workers are self-employed in the agriculture sector, small businesses – tea stalls, street vendors, hawkers, rickshaw pullers, domestic helpers, maids, drivers, cooks, etc. As per NSS, 66th Round (2009-10), 65.6 percent of the total workers were employed in enterprises employing less than 6 workers, 10.5 % were employed in enterprises with 6 and above but less than 10 workers, 6.8 % in 10 and above but less than 20 and 17.1 % in the enterprises with 20 and more workers. All the workers employed in enterprises with 20 or more workers are required to be mandatorily covered under Employees Provident Fund and Miscellaneous Provision Act, 1952. However, the workers employed in rest of the enterprises, excluding some high income self-employed professionals such as doctors, lawyers, accountants etc. for which no separate data is available, are not covered under any pension scheme. A mandatory scheme for such workers is just not possible. Voluntary schemes such as the NPS Lite/ Swavalamban and Atal Pension Yojana which are primarily focused on this category of workers have also not witnessed very encouraging response. It is also an internationally accepted fact that extending pension to the workers on voluntary basis is not very successful. It is in this context that an auto enrolment is being proposed to expand coverage of pension/ old age income security to a larger segment of the society.
Atal Pension Yojana (APY) is ideally suited for the informal sector, especially to relatively better salaried low and middle income segments, and it is our view that APY could be offered on auto enrolment basis to these components of the informal sector. These segments would be Micro Industries, Small Scale Industries, Asha Workers, Aanganwadi Workers, etc. These groups have employer – employee or similar 12 relationships and would therefore make them amenable to auto enrolment. APY can be offered on auto enrolment basis to these groups in the informal sector.