In a bold proposal aimed at securing the future of a rapidly ageing India, financial experts have called for a fundamental shift in pension policy. They advocate for the creation of a permanent retirement account for every newborn, with the government making an initial contribution to kickstart a lifelong savings journey.
The Demographic Imperative for Early Pension Planning
The urgency for this reform stems from stark demographic projections. The United Nations Population Fund’s India Ageing Report 2023 forecasts that the population aged 60 and above will surge from 149 million in 2023 to over 347 million by 2050. This means one in four Indians will be a senior citizen. Concurrently, the old-age dependency ratio is set to double from 16% in 2020 to 34% by 2050, placing an immense burden on the working-age population and state resources.
This scenario makes old-age social and income security (OASIS) a critical pillar for a developed Viksit Bharat. While the National Pension System (NPS) exists, coverage remains modest due to low financial literacy and delayed planning. The authors, G.N. Bajpai (former SEBI chairman) and Praveen Tiwari (former PFRDA executive director), argue that planning must begin at birth, not near retirement.
The "PRAN-DAN" Proposal: A Lifelong Pension Account
The core of the proposal is to issue every newborn a Permanent Retirement Account Number (PRAN) alongside a "PRAN-DAN" card (Defending a Newborn). The Union government would seed this account with an initial contribution of ₹1,000. With approximately 23-25 million births annually, this entails an outlay of around ₹2,300 crore per year.
The PRAN would be linked to the guardian's mobile or UPI ID, prompting them to contribute a minimum of ₹100 per month. To incentivize participation, contributions to the NPS-Vatsalya scheme (the existing vehicle for minors) should be made tax-exempt under the old tax regime. For parents below the taxable threshold, the government could consider matching their contributions.
The seed funding of ₹1,000 per child could be sourced innovatively from:
- Court penalties and traffic challans.
- Unclaimed funds with banks and insurance companies.
- Donations from individuals or corporations.
A Roadmap to a ₹2.1 Lakh Monthly Pension
The power of this model lies in the compounding of contributions over an entire lifetime. The authors provide a illustrative projection: If an individual contributes ₹1,200 annually until age 25, then scales up contributions through working life (₹1.2 lakh from 26-30, ₹1.8 lakh from 31-40, ₹2.4 lakh from 41-50, and ₹3 lakh from 51-60), the corpus could grow significantly.
Assuming a 9% annual return (close to current NPS returns), the corpus would exceed ₹4.2 crore by age 60. This could then generate a monthly pension of over ₹2.1 lakh (assuming a 6% annuity payout), while preserving the principal corpus.
Children enrolled in such a scheme in 2026 would be 21 by 2047—the landmark year for Viksit Bharat—already possessing a substantial retirement fund, fostering financial confidence and stability.
Broader Economic Benefits and a Call to Action
This policy leap offers benefits beyond individual security. The vast, long-term pension capital, locked in for decades, would provide a stable funding source for long-gestation infrastructure and development projects, fueling economic growth. It would also gradually reduce the future fiscal burden on state governments for social security.
The article concludes with a powerful analogy: "you cannot cross a chasm in two leaps." The authors assert that the time to bridge India's pension coverage gap is now. By investing a modest sum at the birth of every citizen, India can build a universally secure, funded old-age security system, ensuring dignity and independence for its elderly and true economic stability for the nation.
