Govt Plans Unified Regulatory Framework for Pension Schemes: Report

The Indian government is working on a comprehensive regulatory and supervisory framework for all retirement financing schemes, with an aim to enhance pension coverage and streamline implementation. The Economic Times, citing officials familiar with the matter, reported that the initiative includes a common grievance redressal mechanism and efforts to address the country’s pension gap.

As part of this initiative, the government is finalizing the terms of reference for a proposed forum for regulatory coordination and pension product development. The forum will focus on harmonizing regulations, eliminating overlapping supervisory roles across various pension schemes, and ensuring regulatory consistency.

Need for a Unified Framework

Currently, India’s contributory pension system is fragmented, with multiple regulators overseeing different schemes. This lack of cohesion has made pensions a less attractive financial product, according to the Finance Ministry.

“There is a need for common regulatory standards that ensure good governance and effective grievance redressal,” an official told The Economic Times. The forum may also explore the integration of different pension schemes currently managed by various central government agencies.

Another official highlighted the urgency of developing new pension products, as India’s pension coverage remains limited. While the National Pension Scheme (NPS) is voluntary, the Employees’ Pension Scheme (EPS) under the Employees’ Provident Fund Organisation (EPFO) has a wage ceiling of ₹15,000 per month, leaving large sections of the workforce uncovered.

“The proposed forum may also suggest measures to converge existing pension schemes under a unified body to enhance coverage and streamline implementation,” the official added.

Government’s Commitment to Pension Reform

Finance Minister Nirmala Sitharaman, in her Union Budget speech, announced the establishment of a forum for regulatory coordination and the development of pension products. The forum is expected to play a crucial role in standardizing supervisory reporting formats, enhancing consumer protection measures, and supporting broader market development initiatives.

Additionally, the government is considering the possibility of introducing a universal pension scheme for all citizens. This initiative, if implemented, could significantly expand pension coverage and offer a more inclusive financial safety net for retirees.

By bringing regulatory consistency and reducing fragmentation, the proposed forum aims to strengthen India’s pension sector, making retirement planning more accessible and efficient for the country’s workforce.