In his Interim Budget presented on 1 February 2019, the stopgap Finance Minister Mr.Piyush Goyal announced a scheme for a monthly pension of Rs.3000 for unorganised workers whose numbers he put at 42 crore. The workers in the age-group of 18 to 40 years would get this pension upon attaining the age of 60 after paying a monthly premium depending upon the duration for which they pay. For instance, a worker who starts paying at the age of 29 would pay Rs.100 per month for 31 years and a worker who starts paying at the age of 18 would pay Rs.55 and after 42 years she would get Rs.3000 per month. The government would make a matching contribution. Workers who are left with lesser years of service before reaching the age of 60 would pay correspondingly more premium.
Critics of the government limited themselves to calling it a pre-poll sop or lollipop. Nikhil Dey of Pension Parishad, a pioneering campaign for the pension rights, demanded that a pension of Rs.3000 should be given to all unorganised workers without collecting any premium as their conditions are precarious.
However, a closer scrutiny of Piyush Goyal’s pension math reveals that the government is out to loot the unorganised workers of their hard-earned money in the name of pension.
Let us now go into the details of the pension math.
Consider the case of an unorganised worker who starts paying a premium of Rs.100 at the age of 29. She/he would be paying this premium for 31 years. The government would also be paying its share of Rs.100 every month for this duration. Instead of going into the pension fund, let us assume that this premium money is invested in recurring deposit in banks. Several banks give interest on recurring deposit at 8% and Deutsche Bank gives a rate of 8.75%. Let us go by the most attractive option for the worker.
If the worker invests Rs.200 (Rs.100 her own money and Rs.100 matching amount given by the government) in recurring deposit for 31 years, it would lead to a maturity fund of Rs.3,84,572 when the worker reaches the age of 60. If the worker invests this money either in corporate deposit or fixed deposit in a bank how much interest she would get? A corporate house like the RP Goenka Group or a private bank like Lakshmi Vilas Bank offers 10.5% interest per annum on fixed deposit. At this rate, the worker would get an interest of Rs.40,380 per year on Rs.3,84,572 and this would work out to Rs.3365 per month. But under the proposed government scheme the worker would get only Rs.3000 per month! The workers would lose R.365 per month and this money robbed from the worker would go to government’s kitty.
The young workers who start paying premium at the age of 18 would be robbed more. They have to pay Rs.55 per month for 42 years and the government would also pay matching amount. If we work out a recurring deposit of Rs.110 (Rs.55 from workers plus a matching amount from the government) for 42 years, the total corpus when the workers reaches the age of 60 comes to Rs.5,76,315. The annual fixed-deposit interest on this at 10.5% would be Rs.60,513 and per month this works out to Rs.5042. In other words, the poor unorganised worker would be paid only Rs.3000 out of this and be robbed of Rs.2042 per month! Some social security this!
Assuming 10 crore workers are brought under this scheme, the total money looted from the workers would run into Rs.20,420 crore per month or Rs.2,45,040 crore per year! Rs.3000 per month per workers after 42 years might be peanuts but this huge amount looted collectively from 10 crore workers would not be insignificant.
Not only this. The worker would only get a monthly pension for her lifetime and at her death the government would not pay the corpus to the next of kin but grab it for itself. So the government would loot Rs.3.8 lakh to Rs.5.76 lakh from every unorganised worker.
The government has also put a ceiling and only those unorganised workers earning less than Rs.15,000 would be covered. Pinarayi Vijayan, the CM of Kerala, announced a labour policy of Rs.600 minimum wage per day, or Rs.18,000 per month, for unorganised workers in Kerala on 14 July 2017. So crores of unorganised workers in Kerala would be excluded from the “national” pension scheme!
Additionally, though Piyush Goyal declared that the scheme is targeted at 42 crore unorganised workers including agricultural labourers, in the same budget speech he said that the scheme would cover only 10 crore workers but to pay government premium he had allocated only Rs.500 crore which means only 5 crore workers would be covered. Considering the extent of loot as described above this could well turn out to be a blessing in disguise!
Also, the workers in the age group of 18-40 years only can subscribe to the pension scheme. That’s means workers above 40 years old can’t even subscribe to this pension scheme.
Unfortunately in India, there is no right to pension/old-age security and just as minimum wage there are no standards to set a ‘minimum pension’ benchmark needed for life-support in old age.
Rs.3000 per month as pension in 2050 would be a joke. For Rs.3000, the worker can buy 100 kgs of rice today at Rs.30 per kg. Going by the average of last 30 years for inflation for industrial workers at 6% per year, the value of Rs.3000 after 30 years would become equivalent to Rs.510 or Rs.17 per day. By 2050, for Rs.17 a day the worker can’t have a single pav bhaji or a cup of chai. This makes a mockery of the very idea of pension as old-age security.
Any pension should enable workers to spend their last years in happiness with old-age security after a lifetime of toil. The society owes it to them. But this government only creates greater insecurity by robbing their money and throwing only pittance at them.