Editor: Srikanth Kumar
Modern work culture is shaped by youth demanding flexible work-life balance. The ‘Be Your Boss’ mindset, combined with the need for multiple income streams, has fueled the growth of the gig economy.
The gig economy is growing at a rapid pace today, accounting for 12% of the labour market. More workers are relying on freelance and contract jobs than ever before. Consequently, this shift to gig based work brings significant changes. Today’s youth also aspire to retire early once they have secured their financial independence, making the question even more relevant how do we design a retirement plan for a gig worker?
Problems faced
Absence of employer-sponsored retirement plans
Traditional employees often receive retirement contributions and benefits automatically deducted from their pay checks, but the gig workers don’t have this luxury. One major downside of gig work is the lack of employer-sponsored retirement benefits, such as the Provident Fund (PF), which relies on an employer – employee contribution model. Without an employer, gig workers cannot avail such schemes and must rely on their own financial literacy and discipline to save and invest for retirement.
Income fluctuation in the gig economy and its impact on retirement planning
Income volatility is a key challenge for gig workers, as irregular jobs and fluctuating earnings make it difficult to build a stable retirement plan. Unlike salaried employees with predictable income, freelancers often face sharp month-to-month variations, some months yielding profits while others barely cover expenses. This unpredictability results in inconsistent savings, poor financial habits, and weak long-term planning, leaving many uncertain about their financial security after retirement.
Traditional financial instruments like the Public Provident Fund (PPF) add to the challenge. While open to all, its 15-year lock-in and mandatory annual contributions make it unsuitable for workers with unpredictable incomes. Such rigidity discourages consistent saving, as gig workers often struggle to commit to long-term goals when their earnings are uncertain.
Irregularity of Gig Work
Irregularity of gig work also eliminates traditional pension schemes like the Employees’ Pension Scheme (EPS) that are tied to long-term service in government or formal employment. This structure leaves out gig workers as they usually shift between short-term, platform-based jobs without accumulating the service tenure required for pensions. Even the National Pension System (NPS), while technically available to them, demands steady, long-term contributions that don’t align well with the income volatility common in the gig economy
Recent Developments
Recent developments show that while major Indian aggregators provide platform workers with benefits like accident protection, health coverage, and scholarships, they struggle to extend long-term security such as pensions due to the transient and irregular nature of gig work.
Traditionally, pensions are structured around fixed, salary-linked contributions, which leaves a vast workforce in gig, platform, and unorganised sectors outside formal coverage. To address this, the government introduced schemes like PM Shram Yogi Maandhan (PM-SYM) and Atal Pension Yojana (APY). However, both schemes have achieved limited success, marked by high dropout rates and minimal pension uptake.
The primary reason for underperformance is their design, which assumes stable monthly contributions. This does not align with the fluctuating incomes of gig or daily wage workers, who cannot commit to fixed payments. As a result, coverage has remained marginal, and participation often tapers off quickly.
Further, the benefits are inadequate. PM-SYM offers only ₹3,000 and APY up to ₹5,000 per month after decades of contributions, neither of which is inflation-linked. By comparison, UPS ensures at least ₹10,000 per month with inflation protection for 10 years of service. Moreover, PM-SYM’s income cap of ₹15,000 excludes many workers who may need support. Overall, these schemes resemble fixed outcome insurance products rather than providing true retirement security.
Solutions
Role of the government:
- Code on Social Security (2020): Extends social security benefits (sickness, maternity, disability, pensions) to both organized and unorganized workers, explicitly including gig workers, and applies universally to all wage earners.
- Universal Pension Scheme: Aadhar or PAN-linked pension accounts could allow employers/platforms to contribute directly to workers’ retirement funds, ensuring continuity across jobs and platforms.
- Platform-based micro-savings and insurance: Gig platforms (delivery riders, drivers, couriers) could contribute ₹10-₹50 per gig to a regulated micro-investment fund, supported by government guidelines.
- Awareness campaigns: Government-led initiatives can promote financial literacy among gig workers, encouraging regular contributions to pensions, emergency funds, and retirement savings.
- Worker-government contributory model: A co-contribution system where the government matches worker savings. Benefits such as matching the first six months and adding annual incentives for consistent contributions can foster long-term savings discipline.
Building awareness among gig workers:
- Automatic contributions: Set up automated deposits into a retirement account to build savings consistently, even with irregular income.
- Emergency fund: Maintain a separate fund to cover short-term needs and protect long-term retirement plans.
- Diversify income streams: Develop multiple income sources to reduce dependency on one and better support retirement goals.
- Regular reviews and adjustments: Track retirement progress, adjust contributions to match earnings, and address any shortfalls promptly.
Policy Recommendations
Having a cross-sectoral approach interlinking technology, labour rights, and urban governance is key. Blurring the line between technology and public utility, gig workers should be integrated as an essential component of the larger urban infrastructure. As last-mile service providers, their functionality warrants regulation on par with public utilities.
Furthermore, a key potential policy step could be to establish a dedicated regulatory authority, a Platform Utilities Commission (PUC), to administer pricing, algorithmic accountability, service delivery, and worker rights. Additionally, gig platforms should be legally obligated to disclose how jobs are assigned, and earnings are determined, as algorithmic transparency remains to be the key to fairness. This information must also be auditable and accessible to both regulators and workers to prevent data
driven discrimination.
The focus must shift from fragmented welfare schemes to structured regulations built on rights, transparency, and public oversight, with fair pricing, accountability, and worker protection at their core. The challenge is not intent but the absence of a strong regulatory framework with real authority. India’s current approach lacks the institutional power and policy vision to treat platforms as critical infrastructure. Re-imagining platforms work as essential infrastructure, rather than just a tech
convenience, is crucial. A rights-based, enforceable regulatory framework would ensure the digital economy benefits the workers who sustain it, creating a more inclusive, accountable, and globally relevant model for the future of work.
Technology to meet the need
Technology can be leveraged to expand the reach and coverage of pension schemes for gig and platform workers. Being tech-savvy, these workers access jobs through mobile phones, and collaborations with aggregators could help bring them into the pension system.
India’s Digital Public Infrastructure (DPI) provides a strong foundation for this. Simple interfaces could give workers clear visibility of their contributions and pension growth, ensuring transparency and ease of use. Systems like the Umang app and phone-based KYC through USSD can be used to design a flexible, inclusive, and long-term pension system for gig, platform, and unorganised sector workers.
Conclusion
Retirement planning in the gig economy has pros and cons. While gig work provides flexibility and the freedom to manage one’s income streams, it also places the burden of retirement planning squarely on the individual’s shoulders.
Without employer-sponsored benefits, gig workers must navigate income volatility, inconsistent social security contributions, and limited access to financial advice. While the government can contribute by improving the benefits for the gig workers, majority of the responsibility must be taken up by the workers themselves. Understanding these challenges is crucial for gig workers to secure their financial future and achieve stability in retirement.
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