NPS Lite/Swavalamban

Swavalamban Yojana seeks to provide pension scheme to the unorganised sector in India. It will be applicable to all citizens in the unorganised sector who join the New Pension System (NPS) administered by the Interim Pension Fund Regulatory and Development Authority (PFRDA)

Under the scheme, Government will contribute Rs. 1000 per year to each NPS account opened in the year 2010-11 and for the next three years, that is, 2011-12, 2012-13 and 2013-14. The benefit will be available only to persons who join the NPS with a minimum contribution of Rs. 1,000 and maximum contribution of Rs. 12,000 per annum.

The scheme was announced by the Finance Minister in Budget 2010-11. It will be funded by grants from the Government of India.

NPS Swavalamban – Making pension possible for small investors

1. National Pension System (NPS) is an initiative of Pension Fund Regulatory and Development Authority (PFRDA), the apex body established by Government of India to regulate and develop the pension sector in India. NPS has been extended to all citizens of India with effect from 1st May 2009. To extend the coverage of NPS to the weaker and economically disadvantaged sections of the society with their limited investment potential, PFRDA has launched NPS- Swavalamban which specifically targets the marginal investors and promotes small savings during their productive life. It aims at building up a corpus sufficient enough to buy an annuity for their old age.

2. “NPS-Swavalamban Model” is designed to ensure ultra-low administrative and transactional costs, so as to make such small investments viable. NPS-Swavalamban works on a “group” model. It also aims at harnessing the outreach and capacity of the Government operated schemes, NGOs, MFIs, NBFCs etc. in targeting and servicing the old age savings needs of low income workers. Each eligible group or “Aggregator” in NPS Swavalamban model will be responsible for grass-root level enrolments, ongoing collection, re-conciliation and transfer of individual contributions as well as for ongoing services and information delivery.

3. “Swavalamban Scheme**” of Govt of India, which grants an incentive of Rs 1000 to all eligible NPS accounts shall be available to all NPS Lite accounts as well, if they meet the prescribed criteria. Distinguishing Features of NPS Swavalamban:

Ø Focussed- For economically disadvantaged sections of the society and marginal investors

Ø Voluntary – Open to eligible* citizens of India, in the age group of 18–60 years. Subscriber is free to choose the amount he/she wants to invest every year.

Ø Simple – Eligible individuals in the unorganized work force can open an account through their Aggregator and get an Individual subscriber (NPS – Swavalamban) Account.

Ø Safe – Regulated by PFRDA, with transparent investment norms and regular monitoring and performance review of fund managers by NPS Trust.

Ø Economical – Ultra-low cost structure with no minimum amount required per annum or per contribution.

Ø Portable – Subscriber can operate account from anywhere in the country, even with change of location, employment or Aggregator.

Swavalamban Yojana As mentioned in the operating guidelines issued by MoF, “Government will contribute Rs. 1000 per year to each NPS account opened in the year 2010-11 and for the next three years, that is, 2011-12, 2012-13 and 2013-14. As a special case and in recognition of their faith in the NPS, all NPS accounts opened in 2009-10 will be entitled to the benefit of Government contribution under this scheme as if they were opened as new accounts in 2010-11 subject to the condition that they fulfill all the eligibility criteria prescribed under these guidelines.”

Accordingly, the basic eligibility criteria for joining the Swavalamban Yojana for a subscriber is given below: Permanent Retirement Account should be opened in the year 2009-10 or 2010-11 and Minimum contribution should be Rs. 1,000 per annum (Financial year) in Tier I account and maximum contribution should be Rs. 12,000 per annum (Financial year) in both Tier I as well as Tier II account together.

For details please visit our nearest CSP…

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