New Pension Scheme for the Unorganized Sector by LIC

The un-organized sector in India defines most of the rural population and a part of urban population who are included in activities carried out by small and family enterprises, and includes family labor. In this sector, the wages of labor are not uniform due to the casual or seasonal nature of employment. This sector has low income, unstable and irregular employment, and lack of protection as they have less or no legislation or trade union in their favor. This sector adds more than 60% to the national income which is twice more than the organized sector in different industries.

Drastic changes in past

With the increase in income, the expenses too hiked. The cost for important aspects of one’s life health and education has become way too expensive. The price are expected to go high and high making it hard for a common man to survive and harder for the unorganised sector to live-by.

Need for Pension Plan

This brings us to one major decision, i.e; to plan our retirement well in advance so that we do not end up having a troublesome retirement age. Pension insurance can ensure you a satisfactory life once you retire. LIC is the company that has offered a pension scheme for the un-organised sector. LIC being the insurance company with highest market share and some great policies has come up with a pension plan for the unorganized sector, and the plan is called Swalavlamban.

SWALAVMBAN- New Pension Scheme for the unorganized sector by LIC

·        Applicability-

The scheme will be applicable to all citizens in the unorganized sector who are willing to join the Now Pension system (NPS) administered by the Interim Pension Fund Regulatory and Development Authority (PFRDA).

·        Benefits-

In this scheme, the Government will contribute Rs. 1000 per year to each NPS account opened, and the benefit will be available only to person who join the NPS with a minimum of 1000 and maximum of Rs. 12000 per annum.

·        Eligibility-

The scheme will be for all the people in the unorganized sector, on the codition that benefit of the Central Government contribution will be available only to those, wo contribute to NPS a minimum of Rs. 1000 and maximum of Rs. 12000 per annum , for both Tire I and II taken together.

·        Funding-

Government of India will fund the scheme through grants. Grants would be given in a way that monthly payment in the subscriber’s account would be possible.

·        Working-

§  A person can join the NPS as an individual as per the existing scheme or through the CRA Lite approved by PFRDA.

§  At the time of joining the NPS, the subscriber will have to declare him/herself as a part of unorganized sector and would have to also declare that their contribution would range betwee Rs. 1,000 to Rs. 12,000 per annum.

§  If the subscriber is found to have made false declaration about his or her eligibility, or has been wrongly benefited under the scheme, then the entire government contribution will be deducted along with the penalty interest which is specified from time to time.

§  If the status of subscriber changes after joining the NPS, he or she is supposed to immediately declare the same and the benefits of the government contribution will not be accredited to the subscriber’s account after the date after which the subscriber becomes ineligible for the benefits or does not fall under the category of unorganized sector.

§  At the end of each financial year, the CRA will be send to the PFRDA details of the NPS accounts opened during the year, showing the number of eligible NPS accounts in which the subscribers have contributed between Rs. 1000 and Rs 12000. CRA will also send these details with individual PRAN to the Trustee Bank.

·        Exit From NPS-

The exit form this scheme will be on the same terms and conditions on which the exit from Tier-I account of NPS is allowed. The conditions are-

§  Exit at the age of 60 with 40% minimum annutisation of pension wealth

§  Exit before age of 60 with 80% annutisation of pension wealth.

§  The exit would be on the condition that the minimum pension out of the accumulated pension wealth would be Rs. 1000 per month; which is revised from time to time.

·        Other conditions-

§  Members of existing pension scheme are allowed to migrate to NPS by PFRDA under certain conditions as approved by the Government.

§  In case of doubt regarding eligibility, operation or any other issue, the central government will decide the issue in consultation with PFRDA and the decision of the Central Government will be considered final.

Conclusion-

There is majority sector in India who earns their living in the un-organised sector and it is necessary that government make plans for them in advance. LIC, being India’s one of the largest, oldest and most trusted companies in life insurance, cater to various segments of society with various scheme and plans, including the unorganized sector of India.