PMSYM pension scheme: Enrolment falls sharply from 1.9 lakh in February to 1.1 lakh in March

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Published: July 10, 2020 7:15 AM

Also, net addition to the EPF subscriber base fell from 10.21 lakh in February 2020 to 5.73 lakh in March and then sharply to just 1.33 lakh in April.

Both the schemes are subsidised out of the central Budget, with the government paying 50% of the contribution.Both the schemes are subsidised out of the central Budget, with the government paying 50% of the contribution.

If the EPFO payroll data showed a big 20% drop in the number of ‘contributing members’ in April over the previous month due to the Covid-19 lockdown, the virtual cessation of economic and trading activities during the month and the continuing slack in most sectors have had a more ruinous impact on jobs in the unorganised sector.

Net monthly additions to the Pradhan Mantri Shram Yogi Maandhan (PMSYM), the subsidised pension scheme for workers in the unorganised sector, fell sharply from 1.9 lakh in February to 1.1 lakh in March and then witnessed a precipitous decline to less than 18,000 each in April and May. Worse, reflecting the enormity of the crisis that engulfs the country’s big and unwieldy informal sector, net addition to the scheme in June was just 14,484. Most of the job losses/income falls that the data represents look irretrievable at least for the time being, given that till the eighth of this month, fresh enrolments under the PMSYM was less than 2,400.

The pension scheme was launched in February 2019 with a view to giving a modicum of social security cover to the likes of domestic workers, rickshaw pullers, cobblers and other low-income workers in the unorganised sector, which employs over 85% of the country’s workforce.

Net enrolment under the scheme peaked at 5.5 lakh in November 2019. A total of 44.17 lakh workers have joined it since the inception, a far cry from the pace required to meet the ambitious target of 10 crore in five years.

Similarly, till now, only 40,368 ‘vyaparis’ (small traders) have enrolled under the Pradhan Mantri Karam Yogi Maandhan Scheme (PMKYMS), rolled out on September 12, 2019. This scheme again has an ambitious target to get three crore retail traders and shopkeepers enrolled, although no timeframe has been set.

Both the schemes are subsidised out of the central Budget, with the government paying 50% of the contribution. The budgetary allocation for the PMSYM for FY21 is Rs 500 crore, while that for the PMKYMS is Rs 180 crore.

The traders’ scheme is limited to those with an annual turnover of up to Rs 1.5 crore. Under both the schemes, a monthly pension of Rs 3,000 is offered to a subscriber on attaining the retirement age. Those belong to the entry age group of 18-40 years are eligible for the schemes. These are voluntary and contributory schemes.

Labour economist KR Shyam Sundar said,” The poor record and continuing declining in the rate of growth in enrollment clearly shows that the adverse impact of Covid-19 on the unorgansied workers. These labourers’ limited capacity or incapacity to pay the stipulated premiums under the scheme appears to discourage fresh enrollments. Under such circumstances, the state as they did for (EPF) payroll should introduce a policy of subsidy for a defined tenure which would incentivise a section of unorganized workers to join the scheme and benefit by it.”

As reported by FE earlier, the number of contributing members to the Employees’ Provident Fund Organsiation (EPFO) in April was a crore or fifth less than in March . The drop in the number of firms who deposited PF monies with the retirement fund body during the lockdown month was a steeper 36% or 1.9 lakh.

The steepness of the fall, coupled with the fact that even in June, “contributing members” of EPFO were 50 lakh less than in March, demonstrates the extent of non-payment of wages and job losses during the lockdown period.

Also, net addition to the EPF subscriber base fell from 10.21 lakh in February 2020 to 5.73 lakh in March and then sharply to just 1.33 lakh in April.

In its latest report, Centre for Monitoring Indian Economy (CMIE) said unemployment rate more than halved in June to 11% from 23.5% in May. Employment rate also improved handsomely from 29.2% in May to 35.9% in June, implying an addition of 70 million jobs.

“The 11% unemployment rate of June is still quite high compared to the less than 8% rate witnessed before the lockdown began. The unemployment rate had been rising steadily since 2017-18 when it had averaged 4.6%. In 2018-19 it rose to 6.3% then in 2019-20 further to 7.6%,” CMIE said.

However, it said the declining trend in the unemployment rate seen in June seems to be flattening out. The rate began to fall in the week ended May 31 when it fell to 20.2% after hovering around 24% in the three preceding weeks.

“The dip (in pension scheme enrolment) is an indicator of the reducing monthly income levels of in workers in the unorganised sector and growing job redundancies. It could also indicate the choice of the workers to keep more liquidity in their hands rather than contribute to the pension given the present uncertainty. If there was a way to unpack the data between contribution from local as against migrant workers it could have thrown more insights,” said Rituparna Chakraborty, executive vice-president, Teamlease.

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