Govt to offer annual bonus to each pension account opened in the next four years, starting April 2010.
In a move to boost the New Pension Scheme (NPS), which drew just 3,800 subscribers in its first 10 months of existence, Finance Minister Pranab Mukherjee announced that the government would contribute Rs 1,000 per year to each account opened in the next four years beginning April 2010. This, he said, would benefit about one million people.
“I am making an allocation of Rs 100 crore for the year 2010-11 for the purpose," Mukherjee said.
However, the government’s support through the initiative, Swavalamban, will not be available to large-ticket investments in NPS. It will be extended only for accounts that have a minimum contribution of Rs 1,000 to Rs 12,000 per year in the new financial year, he said.
“This is a great move forward and we look to add one million individuals in the next financial year,” said Rani S. Nair, executive director, Pension Fund Regulatory and Development Authority (PFRDA). The idea is to provide an added incentive to attract people (into the NPS) who do not have the ability to pay the administrative charges, Nair said.
“We are in talks will the department of posts, which will take up this scheme for its 277,000 Gramin Dak Sewaks (village postal employees) and also with several NGOs that can offer this product in rural areas,” she said.
The PFRDA was established by the central government on in August 2003. The PFRDA Bill, 2005 is awaiting parliamentary approval. But till the Bill is passed, the government has, through an executive order, mandated the PFRDA to develop and regulate the pension sector in India.