Kerala’s Old-Age Pension Landscape: The Indira Gandhi National Old Age Pension Scheme (1995)

Angela Rajeev

Background

The ‘Indira Gandhi National Old Age Pension Scheme (IGNOAPS)’ is the largest facet of the National Social Assistance Programme (NSAP) and has been run by the Ministry of Rural Development since 1995 (Ministry of Rural Development, 2025). This was aimed at extending coverage to all Below Poverty Line citizens aged 60 and above. Under the central scheme, beneficiaries aged 60–79 receive ₹200 a month which rises to ₹500 a month after they turn 80 (Ministry of Rural Development, 2025). Because old age pensions sit on the Concurrent List, states are free and encouraged to top up this floor from their own resources. This has resulted in a wide variation in state expenditure amounts across the country. According to Deccan Herald: state top-ups range from zero to as much as ₹1,800 above the Centre’s ₹200 base. For instance Manipur stands at the low end (₹200 total) and Kerala among the handful of states above ₹1,600–2,000. Kerala has used this latitude more aggressively than most. By 2011, decentralisation reforms had already shifted the responsibility for disbursing old-age pension applications from the Revenue Department to local self government institutions (Government of Kerala, 2025).

Functioning

Within Kerala, five categories of social welfare pension operate under the NSAP umbrella: Indira Gandhi National Old Age Pension, Indira Gandhi National Widow Pension, Indira Gandhi National Disability Pension, Pension for Unmarried Women above 50 and Agricultural Labour Pension (Onmanorama, 2025). Gram Panchayats and Municipalities are responsible for identifying eligible beneficiaries. Around 94 percent of disbursement nationally now occurs through Direct Benefit Transfer into Aadhaar-linked bank accounts and the remainder is paid through postal money order (Press Information Bureau, 2025). In Kerala specifically, funds reach roughly 26.62 lakh beneficiaries directly through bank accounts.

While the remainder (largely elderly recipients without formal banking access) receive payments at their doorstep through cooperative banks (Onmanorama, 2025, August 22). The centre contributes a share of ₹ 200 and this amount is further topped up by the State Government of Kerala at an amount of ₹ 1600. The top-up ranges between ₹ 1100 and ₹ 1400 depending on the pension category (Government of Kerala, Local Self Government Department, 2024). Today Kerala funds close to 98% of its social security pension bill itself and moreover it pays a base amount of ₹ 1600 a month against the Centre’s ₹ 200 to 500 contribution (IMPRI, 2026). The state currently runs the largest social security pension programme in the country and is able to cover over six lakh beneficiaries across 40 categories as of February 2025 (The South First, 2025).

Performance

Nationally, NSAP caters to 3.09 crore beneficiaries. Out of this figure 221 lakh fall under IGNOAPS and are backed by a 2025-26 budget allocation of ₹ 9652 crore (Press Information Bureau, 2025). Kerala’s own numbers dwarf its national share proportionally. The number of social security pensioners (excluding welfare board pensioners) climbed from 34 lakh in 2015-16 to 50.4 lakh by October 2024 and women made up around 63 percent of recipients (The South First, 2025). The state spends over ₹11000 crore annually on pensions and in the 42 months preceding September 2025 it disbursed ₹33,210.68 crore. To put in perspective, this is more than the ₹35,089.19 crore the first Pinarayi Vijayan government spent over its entire five-year term from 2016-2021 (The South First, 2025).

Pension spending now consumes close to 17% of the state’s revenue expenditure (The South First, 2025). Yet performance has been uneven. A 2023 Comptroller and Auditor General performance audit found that while pension payments reduced immediate income vulnerability for BPL elderly households, delays in disbursement blunted this benefit. This resulted in one field audit recording a median payment delay of 91 to 180 days within the Direct Benefit Transfer chain (Comptroller and Auditor General of India, 2023). Kerala’s own record bears this out and media records highlight how during 2023–24 the state defaulted on welfare pension payments for five months. This was a lapse the Communist Party of India (Marxist) itself identified as a contributing factor to its near-wipeout in the 2024 Lok Sabha elections (Deccan Herald, 2024, June).

Impact

Academic evidence, though limited in scope, points to real welfare gains. Using India Human Development Survey data from 2011–12, Unnikrishnan and Imai (2020) found that IGNOAPS participation significantly increased household consumption, food and non-food expenditure, and asset holding among recipient households (as cited in IMPRI, 2026). Within Kerala, because more than 60% of social security beneficiaries are widows or elderly women, the pension functions as a critical channel of economic security for older women who otherwise lack independent income (Kerala Finance Department, 2024–25, as cited in IMPRI, 2026). India’s elderly population already constitutes around 12% of the total population and is projected to reach 319 million by 2050.

This underscores the scale of dependence such transfers will need to absorb (Press Information Bureau, 2026). Conversely, disruptions to the impact are visible when payments lapse. Drawing from real life incidents in January 2024, a 77-year-old differently-abled man in Kozhikode died by suicide and he left a letter attributing his distress to five months of unpaid pension dues. Similarly, two elderly women in Idukki had earlier resorted to begging on the streets in protest against mounting arrears (Deccan Herald, 2024, January 23). Such instances highlight the glaring need for last mile delivery of pension schemes for beneficiaries and those who might be entirely reliant on state pension amounts for their subsistence.

Emerging Issues

Two structural problems dominate current coverage:

First, there appear to be chronic arrears. Despite repeated course corrections, Kerala’s Finance Minister announced in the 2025–26 Budget that the remaining three instalments of pension arrears would be settled only over the course of the year, attributing delays to a shrinking divisible pool and tightened borrowing limits imposed by the Union government (Onmanorama, 2025, February 7). The state has also had to advance the Centre’s own contribution: the Centre reportedly stopped paying its share of the welfare pension since November 2023, leaving an unpaid amount that had grown to ₹419 crore by early 2025, and to ₹400 crore again by mid-2025 according to a separate assembly statement (Onmanorama, 2025, February 7; Deccan Herald, 2025).

Second, there is substantial leakage and targeting failures. An Information Kerala Mission inspection in late 2024 found that 1,458 government employees — including gazetted officers, assistant professors, and higher secondary teachers, with the Health Department alone accounting for 373 cases — were wrongfully receiving welfare pensions meant for BPL households (Deccan Herald, 2024, November 27). Subsequent scrutiny in Kottakkal municipality found luxury car owners, residents of large multi-storey homes, and even one deceased individual still listed as an active beneficiary (Deccan Herald, 2024, November 29). The government ordered recovery of misappropriated funds with 18% interest and directed departmental action against complicit officials (Onmanorama, 2024, December 13), though a follow-up review found that authorities had yet to initiate disciplinary proceedings against most of the identified employees (The South First, 2024, December 29).

Way Forward

The state defends itself by pointing to scale and good intent. Officials note that under the previous UDF government, pensions were delayed by 18 months. This is in comparison to just three months of pending dues now and that payments to welfare boards are expected to cross ₹55,000 crore over the next five years (Deccan Herald, 2025).

Looking ahead, three things need to happen.

A fixed, predictable payment schedule. Right now, pensions often get paid in lump sums timed around festivals like Onam or before elections and not every month like clockwork (Onmanorama, 2025). This means an elderly person or a widow depending on this money might wait months would suddenly get a bigger amount all at once. That’s not how essential income should work. People need to know the money is coming on a certain date every month so they can plan for medicines, food, rent, etc.

Fixing the Centre-state money dispute. The pension money comes from two sources : the central government pays a small base amount (₹200-500) and the state tops it up to ₹1,600. The problem is that sometimes the Centre is slow to send its share but the state still pays the pensioner in full and then waits to get reimbursed by Delhi. So Kerala ends up financing the Centre’s portion out of its own pocket temporarily and naturally this strains its budget. What needs to happen is a faster system for the Centre to send its share on time so Kerala isn’t stuck fronting the money and chasing reimbursements.

Cleaning up the beneficiary database. Right now pension records are being moved onto a digital system linked to Aadhaar (India’s ID system). So payments go directly and correctly to reaL & verified people. In the portal over 2.5 crore such accounts already exist nationally. But the Comptroller and Auditor General and Information Kerala Mission have found gaps. They have highlighted how this could mean people who died still receiving pensions, duplicate entries or genuinely eligible people missing out because their records aren’t updated. Tightening this database means regularly weeding out errors and fake/duplicate entries, so the money actually reaches the right people instead of leaking out.

Kerala’s pension system is ambitious in scale and is also one of the most successful pension systems in the Indian landscape; however its infrastructure needs disciplined scheduling, faster Centre-state settlement and a cleaner database to be truly sustainable.

Selected References and Important Links

Comptroller and Auditor General of India. (2023). Performance audit of National Social Assistance Programme (Report No. 10 of 2023). https://cag.gov.in

Deccan Herald. (2024, January 23). Elderly man ends life in Kerala, likely due to welfare pension due. https://www.deccanherald.com/amp/story/india%2Fkerala%2Felderly-man-ends-life-in-kerala-likely-due-to-welfare-pension-due-2861216

Deccan Herald. (2024, June). Kerala’s Pinarayi government signals course correction, announces time-bound settlement of welfare pension arrears. https://www.deccanherald.com/amp/story/india%2Fkerala%2Fkeralas-pinarayi-government-signals-course-correction-announces-time-bound-settlement-of-welfare-pension-arrears-3100393

Deccan Herald. (2024, November 27). Nearly 1,500 Kerala govt employees found fraudulently claiming welfare pensions. https://www.deccanherald.com/india/kerala/nearly-1500-kerala-govt-employees-found-fraudulently-claiming-welfare-pensions-3294193

Deccan Herald. (2024, November 29). Welfare pension fraud in Kerala: Luxury car owners, affluent individuals found on beneficiary lists. https://www.deccanherald.com/india/kerala/welfare-pension-fraud-in-kerala-luxury-car-owners-affluent-individuals-found-on-beneficiary-lists-3296915

Deccan Herald. (2025). No cut in welfare pension, says Kerala finance minister. https://www.deccanherald.com/amp/story/india%2Fkerala%2Fno-cut-in-welfare-pension-says-kerala-finance-minister-3439843

Government of Kerala, Local Self Government Department. (2025). Indira Gandhi National Old Age Pension. https://lsgkerala.gov.in/en/welfarepension/iop

Government of Kerala, Local Self Government Department. (2024). NSAP. https://lsgd.kerala.gov.in/en/centrally-sponsored-schemes/through-lsgd/mord/nsap/

IMPRI Impact and Policy Research Institute. (2026). Mapping India’s state-wise old-age pension schemes. https://www.impriindia.com/insights/policy-update/mapping-indias-state-wise-old-age-pension-schemes/

Ministry of Rural Development, Government of India. (n.d.). National Social Assistance Programme. https://nsap.dord.gov.in/

Onmanorama. (2024, December 13). Welfare pension fraud: Kerala govt orders recovery of funds with interest from ineligible recipients. https://www.onmanorama.com/news/kerala/2024/12/12/welfare-pension-fraud-kerala-govt-orders-to-recover-money-from-ineligible-beneficiaries.html

Onmanorama. (2025, February 7). Kerala Budget: No hike in welfare pension, FM says arrears will be settled soon. https://www.onmanorama.com/news/kerala/2025/02/07/kerala-state-budget-no-hike-in-welfare-pension.html

Onmanorama. (2025, April 24). Kerala to pay 3rd instalment of unpaid welfare pensions in May, two remaining. https://www.onmanorama.com/news/kerala/2025/04/24/kerala-social-welfare-pension-update.html

Onmanorama. (2025, August 22). Welfare pension: Kerala to clear arrears, distribute 2 instalments for 62 lakh people this Onam. https://www.onmanorama.com/news/kerala/2025/08/22/welfare-pension-onam-two-installment-arrears-social-security.html

Press Information Bureau. (2025, November 7). NSAP: Press release. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2187327

The South First. (2024, December 29). Authorities fail to initiate action against Kerala government officials who misused welfare pension. https://thesouthfirst.com/kerala/authorities-fail-to-initiate-action-against-kerala-government-officials-who-misused-welfare-pension/

The South First. (2025, September 13). Kerala’s proudest welfare achievement stretches state finances. https://thesouthfirst.com/kerala/rising-longevity-soaring-costs-keralas-proudest-welfare-achievement-stretches-state-finances/

About the Contributor

Angela Rajeev is a graduate in Political Science and History, with a minor in Economics, from Christ University, Bangalore. She approaches her research with a passion for gender, public policy, and geopolitics. As a Research and Editorial Intern at IMPRI, she works at the intersection of policy and culture while exploring issues related to governance, society and international relations.

Acknowledgements

The author extends sincere gratitude to the IMPRI team for their guidance and support along with the reviewers Ms. Gargi and Ms. Nivedya for their valuable feedback and insights.