Kerala pension payments go fully digital after CAG flagged home-delivery lapses

The Kerala government has decided to shift fully to the Direct Benefit Transfer (DBT) mode for distribution of social security and welfare fund pensions, three years after the Comptroller and Auditor General of India (CAG) flagged problems with the existing direct-to-home (DTH) system.

In a Finance Department order issued on July 27, 2026, the government directed that pensions be remitted through Aadhaar-linked bank accounts in all cases except those of “fully bed-ridden patients.” The decision follows a recommendation made by the CAG in a report submitted to the Kerala Legislative Assembly in September 2023.

Kerala currently disburses social security and welfare fund pensions to nearly 60 lakh beneficiaries every month, with each eligible person receiving ₹2,000. Two modes of payment have been in use: DBT, where funds are credited directly to bank accounts, and DTH, where pensions are delivered to homes by agents through primary agricultural credit societies (PACS).

The CAG, in its report titled ‘Performance Audit on Direct Benefit Transfer (DBT) of Social Security Pension Schemes’, observed that DTH payments via PACS cannot be considered DBT, as the money is not paid directly to the pensioner. The audited body also noted that only the signature or thumb impression of the beneficiary is taken as acknowledgement by the agent, and these records are kept with the PACS. “Absence of automated beneficiary-wise acknowledgement opens up the possibility of fraud,” the report said.

Further, the CAG cited instances where pensions were disbursed via DTH mode even after the pensioner’s death, pointing to weaknesses in verifying the eligibility and survival of beneficiaries.

Apart from these operational flaws, the state government has been spending crores of rupees every year on incentives paid to individuals who deliver pensions under the DTH mode. In a written reply to the Kerala Assembly in October 2024, K.N. Balagopal, then Finance Minister, said the incentive was ₹30 per beneficiary and that 10,082 persons had been appointed for distribution. According to the reply, the government spent ₹34.11 crore on incentives in 2024-25.

Assembly records show that incentive spending varied over the years: ₹11.79 crore in 2016-17, ₹44.19 crore in 2017-18, ₹28.42 crore in 2018-19, ₹29.88 crore in 2019-20, ₹50.61 crore in 2020-21, ₹11.81 crore in 2021-22, ₹11.76 crore in 2022-23, and ₹34.11 crore in 2023-24.

The recent decision, taken by the present government, aligns with the CAG’s recommendation to bring more beneficiaries under DBT. The Finance Department’s July 27 order cited flaws in the existing pension payment system and a letter from Kerala Social Security Pension Ltd urging a full transition to DBT as reasons for the change.

The move is expected to ensure that pension amounts reach beneficiaries directly, reducing leakages and the risk of fraudulent claims. The exemption for fully bed-ridden patients indicates that some assisted delivery may continue for those unable to operate bank accounts, though the details of such arrangements have not been specified.