In a progressive move aimed at providing long-term financial security to individual entrepreneurs, the Government of India is drafting a new policy to include sole traders under formal pension schemes. This initiative, being spearheaded by the Ministry of Labour and Employment in coordination with the Ministry of MSME, aims to extend the social security net to millions of self-employed individuals who currently operate outside the purview of employee benefit programs. The proposed scheme is intended to address the absence of retirement savings mechanisms for sole proprietors, who often rely solely on their active income for financial sustenance.

Under the draft framework, eligible sole proprietors will be allowed to voluntarily enroll in a government-supported pension plan similar to the Pradhan Mantri Shram Yogi Maandhan Yojana (PMSYM). Contributions can be made monthly, quarterly, or annually, with the option for co-contributions or matching incentives from the government in specific income brackets. The plan proposes flexible contribution amounts to accommodate the varied earning capacities of traders, and the pension benefits would begin at the age of 60, ensuring a fixed monthly income post-retirement. The scheme will be linked to Aadhaar and PAN for streamlined verification, and registration will be facilitated via the Udyam portal and Common Service Centres (CSCs).

Officials involved in the planning have emphasized that this move is not only about economic support but also about recognizing the invaluable role sole traders play in India’s economic ecosystem. With lakhs of individuals managing shops, services, home-run enterprises, and trades, providing pension coverage will offer dignity and stability in later years. Financial literacy drives, digital onboarding, and localized awareness campaigns are also being planned to ensure maximum outreach and participation. The inclusion of sole traders in the national pension system marks a significant step toward social and economic equity for India’s self-employed workforce.