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Pension scheme for unorganised sector workers
Rechristened Swavalamban, this is the first major national scheme aimed at providing old-age security to unorganised sector workers. Under this scheme, the government will contribute Rs 1,000 to the new pension accounts of 40 lakh workers per year.

In an attempt to provide social security to estimated 300 million unorganised sector workers, the Cabinet on Monday approved a pension scheme where the central government will contribute Rs 1,000 per year to each account holder while the beneficiary would contribute between Rs 1,000 to Rs 12,000 per annum.

Under the the scheme titled ‘Swavalamban’, which would be administered by the Pension Fund Regulatory and Development Authority (PFRDA), the government would contribute Rs 1,000 per year to every New Pension System (NPS) 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 said.

Initially 10 lakh workers would be covered each year over the four years ending 2014-15. Under the scheme, the government would provide Rs 1,000 crore over a period of four years.

“A higher level of 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.

The government would also provide about Rs 100 crore to 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. In the absence of any tangible social security measure, a large number of 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.

Source: The Financial Express