Indians have a lot to learn from French protests over pensions

This message, that pensions are incredibly important for the quality of life after retirement, is one that needs to be understood by all Indians. Surveys by various authorities in India have repeatedly shown that awareness about pension is quite low and this must change if the people are to live more comfortably in their old age. People need to think seriously about saving for their old age, as not doing so could spell trouble for them

Newspapers have been reporting the protests taking place in France for several months over reforms to State pensions initiated by the French government. These reforms, which have been pushed through by the government, seek, among other things, to enhance the eligible age for receiving State pension by two years. Though it may appear to be a small matter, most French people are greatly agitated over the reforms as they clash with their idea of work life balance and are seen as interference by the State in the established way of living.

While the debate over reforms continues, what is remarkable about these protests is the sensitivity of people to pensions in French society and indeed in many other countries as well. People are acutely aware of the importance of pensions to their post-work life and will fight tooth and nail against any attempt to tamper with them.

This message, that pensions are incredibly important for the quality of life after retirement, is one that needs to be understood by all Indians. Surveys by various authorities in India have repeatedly shown that awareness about pension is quite low and this must change if the people are to live more comfortably in their old age. People need to think seriously about saving for their old age, as not doing so, in the face of the following trends, could spell trouble for them:

1. Increasing longevity: With average life span of Indians touching 70 years, thanks to better healthcare and nutrition, there will be a need for more financial support.

2. Erosion of the joint family system has meant that the traditional form of old age support has waned.

3. Virtual absence of a State social security support: Except for some schemes meant for BPL families or the disadvantaged sections like widows and differently-abled, none enjoys such support.

4. Rising costs of living, which quickly erode savings

This awareness is all the more important in India because, unlike in France and many other countries, where the bulk of the population is covered by some form of pension, in India, just a fraction is currently covered by pension plans.

The workforce, which is presently covered under pensions, is essentially in the organized sector, whether in the government or in large industries and services, where joining a pension scheme is mandatory.

It is the unorganized sector, comprising of small shops, businesses, farmers, self-employed and others, which remains largely uncovered and which poses the greater challenge.

To give some statistics, as per Economic Survey 2021-22, the labour force in 2019-20 was 56.30 crore, of which 53.50 crore were in employment, with just 5.90 crore in the organized sector and the majority of 43.20 crore in the unorganized sector.

It is important therefore that people in the unorganized sector become aware of the need for saving for their old age through pensions, and the sooner the better.

Governments and regulators are doing their bit to spread the word around about the importance of pensions, but at the end of the day, for most, it is a decision that the individual has to take. There is no time to be lost in planning ahead for a secure retirement.

(The author is former chairman of Pension Fund Regulatory and Development Authority (PFRDA))