Pension to Elderly Women- A step towards dignified grey years

Introduction

In India, joint family system was the basis to meet all the social security needs of the joint family members, whether it was poor health, old age, financial or emotional support to the widow and children of any deceased member of the family. With urbanization, industrialization and migration, India witnessed a gradual disintegration of this system, which necessitated the need of a formal social security system. An important aspect of social security is to provide pension to the elderly population. Considering the current demographic and socio-economic indicators of India, there is a dire need for old age pension security for the Indian women.

This paper focuses on the demographic, social and economic changes impacting the life of women in India , the social security need of the Indian women and the various options of pension available to them viz: social pension schemes, pensions available through employers in India , private pension schemes and the National pension scheme, the limitations and deterrents of these schemes and the desirable ramifications as to make them suitable for Indian women.

Demographic, social and economic transition in India and its impact on Indian women

Indian population is not only growing in numbers but also ageing. We have been witnessing change in the structure of the Indian population owing to demographic transition. Due to increase in life expectancy and decrease in fertility levels, India is witnessing an increase in the number of older persons.

Population Ratio : The proportion of the Indian population is tilted towards male population. The sex ratio of the total population in India is 108.18 males per 100 females. There are 717,100,970 or 717.10 million males and 662,903,415 or 662.90 million females in India (2020) The percentage of the female population is 48.04 percent compared to 51.96 percent male population. If this ratio is seen in various age brackets, then the number of males exceeds the number of females till the age 69 but beyond 70 years of age, there are more females than males in India. This proportion of females is increasing at more advanced ages.

Life Expectancy : As per the economic survey 2021-2022 life expectancy at birth for males in India is 68.2 and for females it is 70.7. Life expectancy for females is thus higher by 2.5 years than males.

Elderly Population in India : The number of people aged 60 years and above were 149 million in 2022 (as on 1 July), which is about 10.5 percent of the total population of the country. It is expected that by 2050, the share of older persons will double to 20.8 percent, with the absolute number at 347 million.

Life expectancy at the age of 60 : Based on the sex- and age specific death rates prevailing at the time, it is the average number of years that a person of 60 years of age could be expected to live. In India life expectancy at 60 years is 18.5 years which means that a person at 60 years, may expect to live another 18.3 years. This life expectancy in case of females is 19 years as compared to males at 17.5 years. The elderly women thus survive for longer duration as compared to males at the age of 60 years.

Decreased fertility rate and less population in the age bracket of 0-14 years

A major factor contributing to demographic transition in India is the decline in the fertility rate. India has witnessed a substantial decline in the fertility rate. There is a decrease of -65.41% in total population fertility rate from 5.7316 in 1950’s to 1.9823 in 2024 births per woman. This downward trend in fertility rate is predicted to further decrease in the future from 1.9823 to an average of 1.6907 children born per woman i.e an additional decrease of -14.71% from 2024 to 2100.

Population aging and Feminisation of India’s elderly population

Population aging results due to shift from high mortality/high fertility to low mortality/low fertility in a country. In India we are witnessing population aging due to increased longetivity, decreased mortality rate and decreased fertility rate.

Besides aging one of the major concern for India, is the growth of the elderly population. The growth of the elderly population is much faster than the growth of the total population of the country. During the period 2000 to 2022, the growth of the total population has been 34% but the growth of 60+ and 80+ population has been 128% and 134% respectively for the same duration.

Population by Age group for selected years in India (in thousands)

Key Population Indicators 2024

The above population indicators by age groups clearly suggest the feminisation of Indian elderly population as the percentage of female population aged 60+ and 80+ is 51.6% and 57.4% of the total population.

MAJOR PROBLEMS OF ELDERLY FEMALE POPULATION

Marginalisation of older women in Urban areas

In rural India, Joint family system still exist and is the major support of the elderly women in villages. They could sail through the financial and emotional crisis in their grey years with the support of the other earning members of the family. Whereas in urban India due to disintegration of joint family system, women often face emotional and financial hardship in old age if they are neglected by their own children during their widowhood or after the retirement of their husbands or their own retirement. This affects both the mental and physical health of elderly females in the urban area.

According to the LASI survey 2.5 percent of the elderly men and 8.6 percent of the elderly women were living alone in India. Many live a neglected life in isolation.

Health problems associated with elderly females

Elderly in India often have mental health issues like cognitive decline, depression and dementia. They usually ignore many of these health conditions, and moreover their families also neglect them and their health issues. As per a recent report of the Longitudinal Ageing Study of India (LASI) nearly 30 percent of elderly persons have depressive symptoms, 15 percent of the elderly aged 60 years and above are in the lowest 10th percentile of composite cognition score as compared to 6 percent of older adults aged 45-59 years.

Besides the mental health issues chronic disease, arthritis, hypertension, heart ailments, fracture, poor vision, impaired hearing, anaemia, bowl disorders, diabetes, locomotor problems are the common problems of the elderly in our country. The situation is more adverse for the elderly females as they neglect their own health due to their mindset, or they lack awareness about these health issues or even if aware of they lack financial support from the family. Many women usually ignore the symptoms of disease and do not share their pain and sufferings as there is no one to pay attention to their problems. Thus they are marginalized and feel neglected in their own family.

Income Insecurity and Financial dependence- a concern for elderly female

It is normal in India for the families to take care of the needs of older members of the family. But in the recent years with the change in socio-economic and demographic structure of the country, financial security from the assets owned by the elderly and personal income are the only support system in old age. Due to lack of any such security, they become financially dependent on their children or relatives. Most of these senior citizens are also uninsured and are not covered by any Government health schemes. Lack of health insurance and rising healthcare inflation cripples the finances of the caretakers who in most of the cases are young.

The Old-age dependency ratio which indicates the number of elderly people above the age of 60 years per 100 persons in the age group of 15-59 years i.e. it is the ratio of elderly people (who are generally economically inactive) compared to the number of people of working age is on the rise in our country.

A glance at the Old-age dependency ratio in India in 2011, by gender and region of origin reveals that in 2011, the old age dependency ratio for females living in rural areas in India was 15.8 percent as compared to men at 14.5% and in urban areas it was 13.1 percent for females as compared to men at 11.8% Thus in both rural and urban areas, the dependency ratio for females was higher than for males. Further, the old age dependency ratio in India is seeing a gradual rise since the past few years.

Projections reflect a steep rise in old age dependency from 2021 to 2031. This ratio among elderly individuals is on the rise. The ratio climbed from 10.9 in 1961 to 14.2 in 2011 and 15.7 in 2021(Projected) and is expected to reach 20.1 in 2031. Female and male dependency ratios are anticipated to increase to 21.5 and 18.8, respectively, by 2031.

Old age dependency ratio by sex and residence, India, 2011

With the feminisation of Indian elderly and fast changing socio-economic circumstances, there is an urgent need of old age financial security for Indian women.

Restricted mobility due to disability or impairment or Lack of care

Most of the elderly women in India have restricted mobility due to ill health or due to lack of support. Disability in old age restricts the elderly in performing their activities of daily living (ADL) like feeding, bathing, dressing, toileting, walking etc.. Higher incidence of impairments (179 per1000) is reported in women over 80 years of age as compared to men in the same age bracket (119 per 1000) (as per the LASI survey) Besides physical impairment ,visual and speech impairments are also common in old age. There is a need of assisted living and assisting care devices when the functional abilities decline even to perform the ADL. Due to financial constraints they cannot afford assisted living devices, could not access healthcare and even lack proper nutritional diet. Many elderly women thus remain confined to bed with no proper care by the family members. They usually remain dependent on male members of the family for their basic needs, even for day-to-day requirements but as many of them outlive their husbands their situation worsens in old age.

 PENSION SECURITY TO ELDERLY WOMEN

The problem of old age is more severely felt by the women because of their being financially dependent either on the spouse or on children. Ignoring the issues concerning elderly women  poses a major social development challenge for the country. Though many social organizations and activists are working for empowering women through various media, many initiatives have been taken at government level for protection and empowerment of women, but they hardly focus on old age income security of women.

Majority of the problems being faced by elderly females have emerged out from a core problem of poverty. If they are financially sound they will be in a position to cope up with these problems. The social security of pension is not available to all in our country. Major pension schemes or the old age financial assistance available for the elderly population in our country are as under:

1.Central and State Government Pension- Central government and State government employees receive pension from the government. These schemes were defined pattern type of schemes and provided a definite amount of pension related to the final salary of the employee, but with the formation of National Pension Scheme the government has shifted to defined contribution type of pension.

2. Pension scheme under Employees Provident fund and miscellaneous provision Act, 1952.– Following three schemes benefit are available to the employees covered under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952:

2. Employees’ Provident Fund Scheme, 1952.
3. Employees’ Deposit Linked Insurance Scheme, 1976.

• Employees’ Pension Scheme, 1995 (replacing the Employees’ Family Pension Scheme, 1971)

Employees’ Family Pension Scheme, 1971-There was a provision of pension to the family only in case of death of the member under this scheme .Pension amount was also very small as the contribution collected to the scheme was only 3.34% (1.67%x2) of the wages. This scheme ceased and was replaced by the  Employees’ Pension Scheme, 1995 (“Pension Scheme”).

Employees’ Pension Scheme, 1995-  is applicable to all members who joined EPF after 15.11.1995. It provides pension to the member in case of retirement as well as family pension to spouse and two children below 25 years of age .Members drawing wages upto INR 15,000 per month are eligible to contribute under this Scheme. An amount equal to 8.33% of wages is pooled into the EPS from the Employer’s contribution. Government also contribute to the scheme at the rate of 1.16% of wages. The maximum pensionable salary for the purpose of determining the monthly pension is INR 15,000 per month. The pensionable salary is calculated on the average monthly pay for the contribution period of the last 60 months preceding the date of exit from the membership.

 3.Social Pension Schemes – There are three pension schemes under the National Social Assistance (NSAP) program for people belonging to Below Poverty Line(BPL) households in  rural and urban areas. The schemes are as follows:

Indira Gandhi National Old Age Pension Scheme (IGNOAPS) Development- It is the extension of the National Old Age Pension Scheme, 1995. It is a noncontributory pension scheme which provides financial assistance to below-poverty-line (BPL) senior citizens, widows and people with disabilities with central government assistance of  Rs. 200 per month to people in the 60–79 years age group and  Rs. 500 to people above 80 years of age.

Indira Gandhi National Widow Pension Scheme (IGNWPS) provides an amount of Rs.300 per month to  widows aged 40-79 years.

Indira Gandhi National Disability Pension Scheme (IGNDPS)- Central government provides benefit of this pension of Rs.300 per month in poor households to persons who are having 80 percent and above/multiple disabilities (PwDs) and are in the age bracket of 18–79 years. The state government also assist by providing an additional Rs.200 per month to each beneficiary.

4.Pradhan Mantri Vaya Vandana Yojana- This scheme was launched by the Ministry of Finance and is implemented through LIC of India. This scheme could be purchased by one time lumpsum payment by any person who is above 60 years of age. The scheme was available to be purchased from 4th May to 31st March2020. It has a policy term of 10 years. The purchase price ranges from a minimum amount or Rs.1,62,162 to a maximum of Rs.15,00,000,with  minimum pension of Rs.1,000 per month to a maximum pension of Rs. 10,000 per month. The scheme provides assured returns payable on monthly basis and is exempted from service tax/GST. Loan facility is available under the scheme after completion of three policy years upto a maximum of 75% of the purchase price. It also provides the facility of premature exit for the treatment of any critical/ terminal illness of self or spouse with return of 98% of the purchase price. In case the pensioner dies during the term of the policy, the benefits of the scheme are provided to the nominee or the beneficiary of the pensioner.

5.Varishtha Pension Bima Yojana Ministry of Finance (Life Insurance Corporation of India) It is an immediate annuity scheme which provides pension to senior citizens above 60 years of age for the lifetime with the return of purchase price to the family/nominee on his/her death, The scheme is being operated through LIC of India. The mode of payment of pension options are monthly, quarterly, half-yearly or yearly. There is a lock-in period of 15 years in the scheme, and the senior citizen get the benefit 9 percent interest rate  per annum for a period of 10 years. Investments are eligible for tax exemption under Section 80C of the Income Tax Act of 1961. On surrendering after 15 years purchase price is returned to the pensioner. In case of surrender before 15 years on account of critical illness ,98% of the purchase price is returned back to the pensioner.

6.Pradhan Mantri Shram Yogi Maan-Dhan Yojana (PM-SYM)- This scheme started in February 2019, provides old age protection to poor labourers in unorganised sector. Unorganized labourers in the age group of 18-40 years having monthly income of less than Rs.15000 and who are not a member of EPFO/ESIC/NPS (Govt. funded) are eligible to join the scheme. It is a contributory scheme with the monthly contribution ranging from Rs.55 to Rs.200 depending upon the entry age of the beneficiary. Beneficiary has to pay 50% of the monthly contribution and an equal contribution is paid by the Central government. On attaining the age of 60 years, an assured pension of Rs.3000/ is paid to the beneficiaries. On death of the beneficiary his /her spouse is eligible for 50% monthly pension. If husband and wife, both joins the scheme, they are eligible for Rs. 6000/- monthly pension jointly.

7.National Pension Scheme for Traders and The Self-employed Persons (NPS)

It is a voluntary and contributory scheme meant for the shopkeepers or owners of petty or small shops, restaurants, hotels, real estate brokers etc. with an annual turnover of less than Rs. 1.5 Crore and who are not covered in EPFO/ESIC/PM- SYM .It is available for the age group of 18-40 years.. The beneficiaries are entitled to receive monthly assured pension of Rs.3000/- after attaining the age of 60 years.

The monthly contribution ranges from Rs.55 to Rs.200 depending upon the entry age of the beneficiary. Under this schemes, 50% monthly contribution is payable by the beneficiary and equal matching contribution is paid by the Central Government.

8. The Atal Pension Yojana (APY) – Started in June 2015 , this is a contributory pension scheme for the unorganised sector . Any bank account holder between the age group of 18 and 40 who is not a member of any statutory social security scheme can avail the benefit under this scheme. An individual is required to contribute for at least 20 years before reaping the benefits of the scheme. This scheme has replaced the Swavalamban scheme of National pension scheme.

The scheme provide pension benefit to those who work in the private sector or are employed in such occupations where they do not get any pension benefit . They can opt for a fixed pension of INR 1,000 or 2,000 or 3,000 or 4,000 or 5,000 on attaining the age of 60. The contribution depends on the amount of pension opted and the age of the member at the time of entry into the scheme. Upon the contributor’s death, the spouse of the contributor gets the pension and after the spouse’s death the corpus accrued is returned back to the nominee. The investment of the amount collected under the scheme is managed by the Pension Fund managers as per the investment pattern specified by the Government. Individual applicants are no given the choice of choosing the pension funds or the  investment pattern as in National pension scheme.

9. National Pension Scheme – The National Pension System (NPS) launched by Government of India on 1st January, 2004 provides an option of contributing for retirement income to all the citizens of India.  It is a defined contributory scheme where the returns are subjected market risk . Initially it was introduced for the new government recruits in 2004 (except armed forces) but with effect from 1st May, 2009 it was opened for all citizens of India between 18 – 60 years which includes residents, non-residents of the country and the unorganized sector workers on voluntary basis. The age bracket has been increased upto 70 years now. Thus investment in NPS can be made by the following sectors:

• Central/State Govt. Employees
• Corporates
• All Citizen Model (Individual)

• Unorganized Sector Workers

The investor has the choice of actively deciding the investment with various fund managers in different asset class or can choose a auto mode of investment.

 10.Trustee administered Pension Schemes by employers for employees – Similar to the Government schemes , many big employers both in  public and private sector have developed pension schemes. These scheme were on defined benefit basis till recent past but now the employers too have shifted to defined contribution type of pension. These schemes are trustee administered schemes, where the employer manages the scheme through trustees and purchase pension from insurance company at the time of payment.

11. Pension schemes offered by Insurance Companies on Group and Individual basis

Public and private sector life insurance companies offer immediate and deferred annuity plans on individual basis. Some of these annuity products are unit linked and the returns in such products are not fixed and depend on the equity market. Besides this they also offer group superannuation plans  with cash accumulation system with guaranteed minimum return on the superannuation funds to the employers on group basis. Annuity and pension plans vary in terms of their benefits and structure. These plans are of following types:

Deferred Annuity: A deferred pension plan is the one in which contributions are made either through regular premiums over a policy term or a single premium option is also there and the fund accumulates for a predetermined term. After the policy term is over, pension/ annuity begins. The premium paid for deferred pension plans qualify for tax relief.

Immediate Annuity: In an immediate annuity plan, pension/ annuity installments commence  immediately after purchasing the plan. One has to deposit a single lump sum amount and pension/annuity starts instantly but the amount varies with the amount invested and the type of annuity option selected by the annuitant. There are several type of annuity options available under these plans viz. annuity for life, joint life annuity, last survivor annuity, annuity guaranteed for a specific term and life thereafter.

Limitations of existing pension schemes-Women Old Age Security Needs remain unaddressed 

• As most of the above mentioned pension schemes are either discretionary or voluntary in nature, many of the middle class women are not aware of such schemes or could not comprehend the benefits which will come in future by paying small contributions in present. They thus do not enroll to avail the benefits of any social security scheme nor do they have any savings or make investment for their old age.
• Central and state government pension schemes cover only a small fraction of the total population and Employees Family Pension scheme is available only to those covered by Employees provident fund and miscellaneous provision Act,1952.
• National assistance scheme providing pension for BPL widows aged 40-79 years with an amount of 300 per month ,Rs.500 for those 80 years and above is grossly insufficient to meet even the minimum subsistence requirement.
• Atal pension scheme-Maximum amount of pension provided to the unorganised sector under Atal Pension Yojna is 5000/ and that too after a minimum deferment period of 20 years. The amount will be grossly inadequate with respect to the inflationary trends. This meager amount after a period of 20 years will not suffice to meet even the basic needs .
• National Pension Scheme-The National pension scheme open to every citizen has not gain popularity. The total number of subscribers as on 31st May,2024 are 1,82,63,659 with a total asset under management of 11,76,862 crores . The majority of subscribers (92,93,341) are from State and Central Government comprising 50.88% of the total subscribers. There are only 36,18,698 subscribers under the all citizen model comprising 19.79% of the total subscribers.

As the scheme does not guarantee minimum pension it is less acceptable by the public. A layman cannot understand the technical aspects of investment under various assets of the scheme, so are less interested in investing in the same.

The scheme provided government contribution of Rs1000/ for the unorganized sector under the swalamban yojna but did not gain popularity, so the subscribers have been merged with Atal pension yojna.

The state and central government employees constitute almost half of the NPS subscriber base. As there is no specific provision to encourage women for voluntary contribution ,the scheme attracts only the male earning members.

 None of the above scheme relates to pension for women except the National widows pension scheme, nor any specific provision has been made in our country to encourage women for old age savings and pension.

The way forward

Women comprising more than 50% of the elderly population could not be ignored. As per the IRDAI report 2022-2023 the total number of policies issued to women is only 34.20% of the total policies issued by life Insurers. There is a grave need to look at the demographic trends in its holistic sense and take measures of creating awareness and educating Indian women to be financially independent. Indian women need to reorient and reinvent their saving patterns. Old age financial dependency and health problems need to be addressed by providing the women customers with the appropriate pension benefit or pension schemes wherein these women could contribute while young.

Insurance companies, Regulator viz.  PFRDA , IRDA, and Government need to work together to bring about this change for older women and ensure them a dignified, healthy and self-sufficient old age.

Sincere and prompt efforts are required to take care of  older women who lead a marginalized, neglected and miserable life. For ensuring the well-being of these demographic future challenges, strategies have to be made in advance. With the decreased women workforce and high old age dependency ratio of females, there is a grave necessity that they save for their grey years.

Some of the measures to improve the current schemes and make them women-oriented could help in bringing the desired financial security :

• Pension and Annuity business constitutes only 23% of the total life insurance business, as per IRDAI annual report 2022-2023. Life insurers need to focus more on pension business by providing appropriate options of women specific pension plans. Product innovation by insurers and awareness amongst women about their old age needs could help elderly Indian women to live a dignified life in their grey years.

Annuity products with special provisions of flexibility in premium payments, better interest rates and annuity options for women could be designed. Encashment of annuity options in case of critical illness specific to women.

• Obligatory business from Women segment-Strict regulations for the Insurers and obligatory business from women segment as a part of corporate social responsibility can bring the women under the pension umbrella.
• National pension scheme needs publicity on a wider canvas to create awareness through news papers, media, advertisements, hoardings and Internet for tech savvy public. Extensive campaigning is required in rural areas to create awareness through primary schools, primary health care centres, banks and NGO’s working in rural areas. Post offices could be used as point of presence for the scheme.
• Government Subsidy for women in NPS– Government initiative on contributory basis for female subscribers in NPS could help in incentivizing and creating awareness amongst females.
• Special Tax incentive for women in Pension plans and NPS-Tax rebate under section 80CCD(1B) has been separately created from assessment year 2015-16 for upto Rs 50,000/ for NPS subscribers. A further step on the part of government for extra tax rebate in case of subscription from any female member of the family could help in creating a specific estate for females for their old age security. Moreover, the tax exemptions under the scheme under tier I is currently EET, and the lunpsum/pension when received is taxable. Tax exemption of the pension amount would make it more acceptable .
• Benefits under National Widows Pension need to be revised upwards as to meet the basic subsistence needs
• Women intermediaries to create awareness for NPS-Special provision of NGOs, self help groups and other agencies working for women welfare to work as Intermediaries for female subscribers could help in creating a vibrant system to reach this segment. In the absence of any women centric specific channel of distribution, the National aim of inclusive growth in financial sector remains a dream. There have been some recent initiatives of the Insurance Regulator to appoint Bima Vahak (women) in the distribution of Bima Vistar product.

Bima Vahak which is a women centric intermediaries channel to outreach women in every Gram Panchayat and village. Bima Vahak are proposed to be deployed by the Insurers by December 31.2024 to sell Bima Vistar products . Bima Vistar  product is designed by the regulator to provide cover for  life , health, personal accident and property insurance only. If the scope of Bima Vahak is extended to provide women centric pension plans , Bima Vahak could prove to be a boon for the millions of elderly women.