The Union Cabinet today approved the implementation of the Swavalamban Scheme to cover workers in the unorganised sector and to provide old age security to all sections of society, particularly the vulnerable sections. The proposal approved by the Cabinet includes:-
Funding support of Rs. 1,000 crore over a period of 4 years i.e.upto 2013-14 as co-contribution to subscribers of the New Pension System covered by the Swavalamban initiative. The funding may be required to be enhanced to a higher level should the subscriber enrolment exceed the expected number.
Funding support to the Pension Fund Regulatory and Development Authority (PFRDA) of about Rs.100 crore for the promotional and developmental activities for enrolment and contribution collection under the scheme.
The scheme will encourage people from the unorganized sector to voluntarily save for their old age. A higher level of New Pension System (NPS) enrolments from the informal sector will ensure old age income security for such subscribers in their post-retirement phase and, therefore, decrease the burden of the Government on social security in the future.
The New Pension System (NPS) is the first major national scheme that aims to bring old age security to all sections of the society, especially the vulnerable sections. The Government has also provided Rs.100 crore to be spent in 2010-11 and in the subsequent three years towards creation of public awareness about NPS and enlistment of subscribers under the Scheme.
Under the Swavalamban Scheme ten lakh subscribers each in the four years beginning 2010-11 will be covered bringing the total number of subscribers to 40 lakhs. The Government of India shall contribute Rs.1000 per annum per NFS account in each year i.e. during the current year and the next three years, provided that the subscriber contributes any amount between Rs.1000 -12,000 per annum. This is a voluntary defined contribution scheme, which any citizen of India in the unorganized sector can join.
The Scheme shall be managed by PFRDA and Government will release its contribution to PFRDA for crediting the same to the NPS accounts of eligible subscribers.
Background:
A majority of India’s 30 crore informal sector workers are highly vulnerable to old age poverty because they have traditionally been excluded from formal pension provisions and are unable to access regulated retirement savings products at an affordable transaction cost. The old age income security system in the country covers only the organized sector comprising the public sector (including the civil service) and the establishments covered under the Employees’ Provident Fund Organisation (EPFO) or other statutory Funds.
Source : PIB
