Pension

 

A pension is an arrangement to provide people with an income when they are no longer earning a regular income from employment.

National Pension System (NPS)

The National Pension System is an attempt towards providing adequate retirement income to every citizen of India. NPS aims at ensuring financial security to every citizen by encouraging them to start contributing towards the old age saving.

NPS is offered to employees of various State Governments, corporate, and individuals belonging to unorganized sector (UOS) and economically disadvantaged Sections (NPS-Lite).

In order to promote NPS and extend NPS benefits to maximum possible target beneficiaries, Government of India has recently launched “Swavalamban” scheme, under the name of ‘Swavalamban Yojana’ in which government has made a provision to pay an incentive contribution to each subscriber of Unorganized sector and NPS Lite sector who is willing to participate in this scheme and also fulfilling eligibility criterion.

All subscribers registered in FY 2010-11 will be eligible for getting the Swavalamban contribution for the financial years 2010-11, 2011-12, 2012-13, 2013-14 and the subscribers getting registered after FY 2010-11 will be eligible to get Swavalamban contribution upto FY 2013-14.Also as a special consideration, subscribers already registered in FY 2009-10 will also be eligible to participate in this scheme.

Under Swavalamban scheme GOI will contribute Rs. 1000 per year (for a period of four years) to every National Pension System (NPS) account opened subject to below mentioned conditions.

Subscriber is not covered under employer assisted retirement benefit scheme and also not covered by

social security schemes under any of the following laws:

  • Employee Provident Fund and Miscellaneous Provision Act, 1952
  • The Coal Mines Provident Fund and Miscellaneous Provision Act, 1948
  • The Seamen’s Provident Fund Act, 1966
  • The Assam Tea Plantation Provident Fund and Pension Fund Scheme Act, 1955
  • The Jammu & Kashmir Employee Provident Fund Act, 1961

Subscriber contribution in NPS is minimum Rs. 1000 and maximum Rs.12000 per annum, for both Tier1 and Tier II taken together, provided subscriber makes minimum contribution of Rs.1000 per annum to his Tier 1 account .Also there is provision for recovery of Swavalamban benefits with penal interest in case the subscriber gives false declaration.

Modes to enroll for Swavalamban scheme

As per existing scheme under National Pension System (NPS), Swavalamban could be availed either in unorganized sector or in NPS Lite. In unorganized sector it can be availed through Point of Presence and in NPS  Lite it can be availed through Aggregators

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NPS Lite Model

For the weaker and economically disadvantaged sections of the society with their limited investment potential there was need to engage the individuals in pension schemes. PFRDA, being conscious of its ultimate responsibility in providing a uniform platform for old age income security to all sections of society has developed a cost effective and feature optimized model of NPS which facilitates economically weaker sections of the society to join the NPS platform.

NPS Lite is a model specifically designed to bring NPS within easy reach of the economically disadvantaged sections of the society. NPS Lite is extremely affordable and viable due to its optimized functionalities available at reduced charges.

Aggregator: NPS Lite is extended to its target population through specific entities identified by PFRDA, termed as “aggregators” who would enroll their underlying subscribers in NPS Lite as groups. The aggregators shall be the main interface between the NPS Lite subscriber and NPS architecture. Aggregator would be an agency which takes on the NPS related responsibility on behalf of its constituent’s viz. Self Help Groups and their federations, MFIs, NGOS, Nodal Offices of Govt. Sponsored schemes etc.

Unorganized Sector Model: National Pension System (NPS) was rolled out from 1st May 2009 for all citizens of India, other than Government employees covered under NPS. This was called as unorganized sector under NPS. For this purpose PFRDA selected and authorize entities as Points of Presence (POPs) to extend customer interface for nongovernment subscribers/individual citizens.

Points of Presence: Points of Presence (POPs) are appointed by the PFRDA to provide various facilities to all citizens (known as ‘Subscribers’ in the NPS architecture) at various locations across India. POPs provide the services under NPS through their network of branches called POP Service Providers (POP-SP). A POP acts as the first point of interface between voluntary subscriber and NPS architecture.

Eligibility: The scheme will be applicable to all persons in the unorganised sector subject to the condition that the benefit of Central Government contribution will be available only to those persons whose contribution to NPS is minimum Rs.1,000 and maximum Rs. 12,000 per annum, for both Tier I and II taken together, provided that the person makes a minimum contribution of Rs. 1000 per annum to his Tier I NPS account.

As a special case and in recognition of their faith in the NPS, all NPS accounts opened in 2009-10 will be entitled to the benefit of Government contribution under this scheme as if they were opened as new accounts in 2010-11 subject to the condition that they fulfill all the eligibility criteria prescribed under these guidelines.