How terribly strange to be 70

The Pension Fund Regulatory and Development Authority Bill (Pension Bill) sailed through the Rajya Sabha in the last session of Parliament without much drumbeating in the press.

The Bill, nearly ten years in the making, will allow 26 per cent foreign direct investment in the insurance sector, seeking to create some sort of regulation for the country’s almost non-existent formal pension system. This is all good news, save for one major caveat: only about 6 per cent of India’s labour force falls under the protection of this Bill; the other 94 per cent is engaged in the informal economy and arguably the one in more urgent need of social security cover.

Coupled with the UN projection that one out of five Indians will be above the age of sixty by the year 2050, this sheer volume of people, largely from the informal sector, begs the question: what are we doing to secure our elderly?

To be sure, the demography of India is changing. While academics and big donors rightfully focus funds and attention on family planning to lower fertility, and interventions to reduce infant mortality, the continued success of these means a larger volume of Indians surviving to older ages than ever before.

This intervention has implications for the family and resource allocation — a growing proportion of older women (particularly widows), fewer children to take care of parents surviving to older ages, and changing household structures due to employment-related migration and/or marriage of children. All three warrant discussion on an overhaul of existing pension systems sooner rather than later.

Govt to children

Unique to India and other South Asian countries, women currently above the age of sixty were married at a time when low literacy and large spousal age differences were the norm, and financial identity was associated primarily with the husband’s income. Losing the spouse is difficult for anyone, especially when systems are not in place to provide assistance.

The Indira Gandhi National Widow Pension Scheme (IGNWPS) is designed to grant up to Rs 300 a month with matching contributions from each state for ‘below the poverty line’ widows aged 40-59. This arbitrary cut-off not only excludes women who have lost their spouses early in the marital process, but also provides a sum of money that is inadequate, to say the least.

Some states such as Himachal Pradesh even tie in the IGNWPS to one’s son and his income; a woman is ineligible for this pension if she has a son who earns more than Rs 11,000 per year. This demonstrates not only the determination of a woman’s identity but also how the carefully crafted language of national Bills shifts the onus of financial care of the elderly from the government to children.

The migration factor

Traditionally, social security in India has existed in the form of shared residences with one’s children, preferably male children.

With the Census reporting increasing employment-related migration for men and marriage migration for women, a number of elderly in India are living alone.

Analysis of two rounds of the National Family and Health Survey shows that the proportion of elderly living alone or with their spouse only jumped from 9 per cent to 19 per cent in just over a decade.

While this may signify financial independence rather than social isolation, the former is unlikely, since this group largely comprises widows and the urban poor.

This makes the need for stronger pensions in lieu of familial support systems especially relevant.

For children migrating to cities for employment, it is largely unfeasible to bring their parents along due to high housing costs, cramped urban dwellings, and changing preferences for an independent living.

Old-age homes are still taboo, and in-home elder care is unaffordable to most. Rather than lamenting the loss of “the Indian family,” it is time to start thinking creatively about caring for elderly who live alone, especially in terms of healthcare.

A 4-2-2 Structure

China has a unique “4-2-1” problem referring to a consequence of the one-child policy, where one employed child is expected to take care of two parents and four surviving grandparents.

While India’s family planning policies have not been restrictive (although some have argued they have been coercive even post-Emergency), access to contraception and abortion services, coupled with campaigns to lower fertility, have resulted in a dramatic reduction in fertility. Some states are already at or below replacement level fertility (2.1 children per woman), the equivalent of population stabilisation.

This signals that we could see a similar 4-2-2 structure in India, where traditional norms still dictate the importance of the family in elder care. While children and parents seem to have evolving preferences regarding care-giving, the Government mandates familial support as a legally binding contract, which seems rather incongruous.

The Maintenance and Welfare of Parents and Senior Citizen Act (2007) makes it legal for parents who are unable to care for themselves (“care” being loosely defined) to demand maintenance from their children in terms of food, clothing, residence, medical attendance, and treatment — failure to provide so can result in the imposition of a fine post-trial. The Indira Gandhi National Old Age Pension Scheme (IGNOAPS) is similar to the IGNWPS save for the intended audience — all destitute and/or BPL elderly above 60. There have been concerted efforts to mobilise public opinion in favour of a substantially higher and universal pension by the Pension Parishad and HelpAge India in the last year. While these have been a very crucial first step, one wonders how best to manage a universal pension scheme.

The locus of implementation for these central pensions is each state, wherein lies the issue of accountability. Additionally, proving that an individual belongs to a BPL family is hard enough, but providing required proof of widowhood for instance — death certificate for a husband — is contingent on having a birth certificate for that person, something that many just do not possess. Streamlining the documentation process via Aadhaar may be one route to link eligible elderly to the monthly pension they are due, which some states have begun to experiment. While India does boast a demographic dividend which will potentially mitigate the skewed old age dependency ratio to the levels of Italy and Spain, this group desperately needs jobs and education to reach economic potential.

European countries are currently facing a demographic crisis in terms of support for their burgeoning elderly populations, leading to discussions about raising the retirement age, incentivising couples to have more children, and increasing immigration.

While India is decades away from even the need for any such dramatic governmental mediation, debating the importance of institutional safety nets for aging India and implementing existing pension systems would be a welcome addition to the national agenda.

(The author is a CASI Research Associate. She is a doctoral candidate in demography at the University of Pennsylvania.)

COMMENT NOW