Rs 1,000 a year pension aid okayed to informal sector workers | business | Hindustan Times
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Rs 1,000 a year pension aid okayed to informal sector workers

The government today approved a Rs 1,000 per annum pension assistance to unorganised sector workers to inculcate the habit of savings among this population of over 300 million.

business Updated: Aug 09, 2010 13:31 IST

The government on Monday approved a Rs 1,000 per annum pension assistance to unorganised sector workers to inculcate the habit of savings among this population of over 300 million.

Under the 'Swavalamban Scheme', the government would contribute Rs 1,000 per year to every New Pension System account of 40 lakh such workers over four years starting this fiscal.

The assistance is subject to the beneficiary contributing any amount between Rs 1,000 to Rs 12,000 per annum, according to an official statement.

Initially 10 lakh workers would be covered each year over the four years ending 2013-14 (rpt) 2013-14.

"A higher level of New Pension System (NPS) enrollments 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," said the statement issued after the Cabinet meeting in New Delhi.

Under the scheme, the government would provide Rs 1,000 crore over a period of four years to 2013-14.

Initially, the government had launched the NPS for central government employees joining service from January 1, 2004, but from May 1 last year it was extended to all citizens. However, it received a lukewarm response and only around 8,000 subscribers joined the scheme in 14 months.

The government would also provide about Rs 100 crore to the Pension Fund Regulatory and Development Authority (PFRDA) for promotional and developmental activities for enrollment and contribution collection under the 'Swavalamban' scheme.

Finance Minister Pranab Mukherjee in his Budget speech this year had announced to launch the 'Swavalamban' scheme in the current fiscal.

A large number of India's 300 million informal sector workers are highly vulnerable to old age poverty because they have traditionally been excluded from formal pension provisions.

The old age income security system in the country covers only the organised sector, comprising the public sector (including the civil service) and the establishments covered under the Employees' Provident Fund Organisation (EPFO) or other statutory Funds.