DoRD-PFRDA MoU Launches Pension Sakhis for Rural Retirement Outreach

India's formal social security system covers only a small share of its total workforce. Statutory instruments such as the Employees' Provident Fund and Miscellaneous Provisions Act, 1952, the Employees' State Insurance Act, 1948, and the Pension Fund Regulatory and Development Authority Act, 2013 protect organised-sector workers. Over 90% of India's workforce, however, is employed in the informal economy. These workers have no mandatory retirement protection. The constitutional basis for old-age welfare rests on Article 41 (directing the state to provide public assistance in cases of old age, sickness, and disablement) and Article 46 (promotion of economic interests of weaker sections). Both are non-justiciable Directive Principles. They impose a policy obligation on the state but do not create enforceable individual rights.

To address the informal-sector gap, the government has created voluntary contributory schemes. The most significant is the National Pension System (NPS), regulated by the Pension Fund Regulatory and Development Authority (PFRDA). For unorganised workers specifically, the Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM) scheme provides a guaranteed minimum pension of ₹3,000 per month after the age of 60. Enrolment is open to workers aged 18 to 40 years. Contributions are age-specific and matched by the government. The Atal Pension Yojana (APY), also administered by PFRDA, targets workers in the unorganised sector with pension guarantees ranging from ₹1,000 to ₹5,000 per month. Despite these schemes, enrolment among rural households remains low. The core barrier is not the absence of products but the absence of trusted, accessible intermediaries who can explain and facilitate enrolment at the village level.

The Deendayal Antyodaya Yojana – National Rural Livelihoods Mission (DAY-NRLM) has, over the past decade, built exactly such an intermediary network. It has mobilised tens of millions of rural women into Self-Help Groups (SHGs), trained community resource persons, and deployed Banking Correspondent (BC) Sakhis to bring basic banking to unbanked villages. Research and policy evaluation of SHG-linked microfinance programmes consistently show that SHG membership improves household savings behaviour, financial literacy, and women's decision-making power. The 2020 UPSC Mains question on SHGs as an anti-poverty tool reflects this well-established policy consensus: SHGs are effective not only for credit access but for building the financial confidence that enables households to plan for the long term.