New Delhi: The government Monday decided to launch an ambitious old age social security scheme involving an annual pension assistance of Rs.1,000 each to four million workers in the unorganised sector for next four years, beginning this fiscal.
The decision was taken at a cabinet meeting chaired by Prime Minister Manmohan Singh.
Rechristened Swavalamban Scheme, the New Pension System (NPS) is the first major national scheme aimed at providing old-age security to all sections of the society, especially the vulnerable sections, said an official statement.
To finance the scheme, the government has approved an allocation of Rs.1,000 crore over a period of four years as co-contribution to subscribers of the New Pension System, said the statement.
It added that the government`s funding may be required to be enhanced if subscriber enrolment exceed the expected number.
Beginning this year, the government expects enrolment of around 1 million subscribers each fiscal till next four years, said the statement.
The government will annually contribute Rs.1,000 per pension account during the current year and for the next three years, provided the subscriber contributes Rs.1,000-12,000 per annum.
The statement said the scheme would be managed by Pension Fund Regulatory and Development Authority (PFRDA) and the government will release its contribution to PFRDA for crediting the same to the pension account of old age pension scheme.
The government will also provide Rs.100 crore to PFRDA for the promotional and developmental activities for enrolment and contribution collection under the scheme.
As per official estimates, 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 and the establishments covered under the Employees` Provident Fund Organisation (EPFO) or other statutory Funds.