- 28-Jul-2025
- Elder & Estate Planning law
Daily wage workers, comprising a large portion of the informal workforce, often face significant challenges when it comes to retirement planning. These workers typically do not have access to formal retirement schemes like those provided to salaried employees, such as Provident Fund (PF) or pension schemes. This leaves them vulnerable in their later years, especially if they are unable to continue working due to age or health issues. However, several government-backed programs and private schemes have been designed to provide some degree of financial security for these workers during their retirement years. In addition to these formal schemes, there are also a variety of informal savings methods that workers can consider.
One of the most crucial steps for daily wage workers is to register for government-sponsored retirement schemes. Many governments have recognized the challenges faced by the informal sector and designed specific schemes aimed at offering some form of pension or financial support. For example, the Pradhan Mantri Shram Yogi Maandhan Yojana (PM-SYM) in India provides a monthly pension of up to ₹3,000 for workers in the unorganized sector once they reach the age of 60. To qualify, workers need to contribute a small sum each month, and the government also contributes toward the pension. This program is designed to ensure that even workers who don't have regular savings or retirement plans can still have a source of income in their old age.
Apart from government schemes, workers can opt to voluntarily contribute to pension schemes such as the Atal Pension Yojana (APY). Under this scheme, workers can contribute as little as ₹42 per month, depending on their age, and receive a fixed monthly pension upon retirement. This scheme is beneficial for workers who may not be able to set aside large amounts of money but still want to ensure some income in their retirement years.
In the absence of formal retirement plans, many daily wage workers save money in informal savings groups, known as chit funds or rotating savings and credit associations (ROSCAs). These groups are common in various parts of the world and provide a way for workers to pool their money together. Members contribute a set amount every month, and the pooled funds are rotated among the group members in a way that provides them with lump sum payments at different intervals. While these savings plans do not offer the same guarantees as formal pension systems, they do provide an alternative means of building financial security in old age.
While most employers of daily wage workers do not provide formal retirement benefits, some sectors or industries (especially those governed by specific labor laws) may offer gratuity or pension plans. For example, workers in construction or factory settings may be able to access benefits if their employer is part of a larger, more formal organization. It's always beneficial for workers to inquire with their employer about any potential retirement benefits.
Many NGOs, social organizations, and even trade unions offer financial literacy programs for daily wage workers. These programs help workers understand how to manage their income, save for the future, and make informed decisions about retirement planning. Financial literacy can also help workers make use of government schemes and other support programs more effectively.
Daily wage workers in many countries are entitled to certain social security benefits, including medical insurance, maternity benefits, and pensions. In India, for example, the Employees' State Insurance Scheme (ESIS) covers workers in certain sectors, providing health insurance and other welfare benefits. However, because daily wage workers are often not formally employed, they may need to be proactive in registering for these benefits, where available.
Some countries, particularly in Asia and Africa, have established Workers' Welfare Funds designed to provide financial assistance for informal workers. These funds help workers save for retirement and provide financial assistance during emergencies. In India, for example, the Building and Other Construction Workers' Welfare Cess contributes to the welfare of workers in the construction sector, providing them with pensions, health insurance, and other support.
In many countries, including India, new laws are being passed to include informal workers under social security schemes. India's Social Security Code now extends certain benefits to gig and platform workers, making it easier for daily wage earners in these sectors to access retirement savings and insurance.
A daily wage worker in the construction industry named Ramesh, aged 50, registers for the Pradhan Mantri Shram Yogi Maandhan Yojana after learning about the scheme during a workers' meeting. He begins contributing ₹55 per month, and the government contributes ₹55 as well. By the time Ramesh reaches 60, he will start receiving a monthly pension of ₹3,000, providing a much-needed financial cushion during his retirement years.
Sita, a daily wage worker in a small garment factory, decides to join a local chit fund group where workers pool money each month. Over time, Sita is able to accumulate a significant amount of money, which she can use for her retirement or emergencies, though this is not a formal pension. She also keeps her ear to the ground for any government schemes that may benefit her in the future.
While daily wage workers may not have the same access to formal retirement schemes as salaried employees, there are several government programs, voluntary pension schemes, and informal savings options available. It is crucial for workers to be aware of these options and take active steps to secure their financial future. Through government schemes like PM-SYM, social security programs, and informal savings groups, daily wage workers can ensure some level of financial security in their later years.
Answer By Law4u Team
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