Thiruvananthapuram: The UDF-led Kerala government has given in-principle approval to a proposal to stop delivering social security pensions directly to beneficiaries’ homes through cooperative banks.

Under the proposed system, only bedridden beneficiaries will continue to receive their pensions at home. All others will receive the monthly payment through Aadhaar-linked bank accounts.

This means social security pension payments will eventually be made only through commercial bank accounts. The government has not yet specified when the new system will come into effect.

23 lakh beneficiaries could be affected

The previous LDF government had, from 2016, arranged doorstep delivery of pensions through primary cooperative banks for beneficiaries who requested the facility.

Of the nearly 52 lakh people receiving social security pensions in Kerala, around 23 lakh currently receive them directly at home through this system. The proposed change is therefore likely to affect a large majority of those beneficiaries.

The doorstep system has also been useful for people with disabilities, those who are physically weak, elderly beneficiaries, those without anyone they can depend on, and people living in areas without banks or ATMs.

Cooperative societies and agents face income loss

The government currently pays an incentive of ₹25 to an agent and ₹5 to the cooperative society for delivering each pension to a beneficiary.

Around 5,000 agents working across 1,625 cooperative societies are involved in pension distribution. The proposed shift to bank-account payments will therefore also result in an income loss for these agents and societies.

The move to make pension payments through bank accounts follows a request from the Social Security Pension Company, which oversees the distribution of the pensions.

The Social Security Pension Company has cited four reasons for shifting the system entirely to bank-account payments.

First, cooperative societies are taking time to return money that remains undistributed after funds are provided for doorstep pension delivery.

Second, removing cooperative banks from the distribution process would save the government the incentives paid to agents and societies.

Third, doorstep delivery is against the Centre's guidelines on Direct Benefit Transfer (DBT), according to the company. The state is losing central financial assistance under this head because the guidelines are not being followed.

Fourth, pension distribution is not completely Aadhaar-based at present. The company says this allows ineligible beneficiaries to receive pensions and creates the possibility of the same person receiving the benefit more than once.

Concerns over access for vulnerable beneficiaries

Under the proposed arrangement, bedridden beneficiaries will have to be identified separately and specific criteria will have to be framed for this purpose.

Limiting doorstep delivery could force people with disabilities, elderly beneficiaries and others who are physically vulnerable to visit banks or ATMs to access their pensions.

They would also need to maintain accounts with commercial banks. Beneficiaries who are unable to manage such procedures independently may have to depend on someone else to withdraw their money.

For many, this could be less secure than receiving the pension directly in their hands at home.

Opposition likely over withdrawal of facility

The proposed change could trigger strong opposition, particularly because around 23 lakh beneficiaries have been using doorstep pension delivery for nearly a decade.

At the same time, the government expects Aadhaar-linked payments to help prevent pensions from being claimed by ineligible beneficiaries or withdrawn in the names of people who have died.