Pension sector needs to scale up to enhance coverage of social security: Economic Survey
Economic Survey 2024-25 on Friday made a case for scalability of pension coverage to bring more people under the social security net. Despite significant advancements in the pension sector, just 5.3 per cent of the total population is covered by the National Pension System (NPS) and Atal Pension Yojana (APY) combined.
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«This highlights another critical aspect of the Indian pension system: scalability. Low costs are essential to enhance coverage meaningfully. Achieving this will require highly competitive, low-cost fund management and minimal transaction costs, which is particularly vital for small-ticket transactions,» it said.
In principle, it said, taking into consideration both scalability and sustainability, India's pension system design seems robust and stable, the survey tabled in Parliament said.
NPS is one of the lowest-cost pension schemes globally and its framework is based on a defined contribution model, which ensures that future payouts are determined by market fluctuations, thereby reducing the fiscal burden on the government.
Additionally, APY aims to address the retirement needs of the unorganised and informal sectors — first time in India's pension history.
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