To encourage people from the unorganized sector to voluntarily save for their retirement and to lower the cost of operations of the New Pension System (NPS) for such subscribers, a co-contributory scheme called "Swavalamban," was launched on 01.04.2010 by the Central Government. The Scheme is to be administered by the Interim Pension Fund Regulatory and Development Authority (PFRDA). The Central Government shall contribute Rs. 1000 per annum to such subscribers. As per the Government guidelines for Swavalamban, any citizen who is not part of any statutory pension scheme of the Government and contributes between Rs. 1000 and Rs. 12000/- per annum, could join the Swavalamban Scheme. The Swavalamban Scheme is open till Financial Year 2016-17 and it is expected that the Scheme would benefit about 70 lakh NPS subscribers of the unorganized sector during the period. Further, Finance Minister has announced in his Budget Speech 2011-12 that: -
"I had announced a co-contributory pension scheme 'Swavalamban' in the Budget 2010-11. This scheme has been welcomed by the workers in unorganized sector. Over 4 lakh applications have already been received. On the basis of the feedback received. I am relaxing the exit norms whereby a subscriber under Swavalamban will be allowed exit at the age of 50 years instead of 60 years, or a minimum tenure of 20 years, whichever is later. I also propose to extend the benefit of Government contribution from three to five years for all subscribers of Swavalamban who enroll during 2010-11 and 2011-12. An estimated 20 lakh beneficiaries will join the scheme by March, 2012."
In view of the encouraging response to the Scheme, relaxations are being provided in the exit norms of the Scheme, whereby a subscriber under Swavalamban will be allowed exit at 50 years (instead of the existing prescribed age of 60 years) or a minimum tenure of 20 years, whichever is later. Further, to encourage and incentivise the early subscribers, benefits of Government contribution have been extended to all the subscribers of Swavalamban, who enroll during the years 2010-11, 2011-12 and 2012-13, for another five years. With a view to enroll more and more people under the Swavalamban Scheme, the existing distribution mechanism has been strengthened with Life Insurance Corporation of India being appointed as Aggregator and all the public Sector Banks being appointed as Points of Presence / Aggregators. A total of 3,01,920 subscribers were enrolled during 2010-11 and 6,43,980 subscribers have been enrolled during 2011-12.
2. The contributions of the subscribers under Swavalamban would be collected by agencies, such as, Government agencies or NGOs called Aggregator, in flexible installments on monthly or quarterly basis. The contributions of subscribers would be invested in the financial instruments and the returns and the contributions would be used to build the pension corpus of the subscribers. The subscriber could be eligible to get pension from a life insurance company at age of 50 by using 40% of the pension corpus. However, if the amount of pension corpus is not sufficient to get a minimum amount of pension of Rs. 1000 per month, then the percentage of pension corpus would be increased so that the pension amount becomes Rs. 1,000 per month, failing which the entire pension corpus would be used to get pension.
3. PFRDA has identified different beneficiary groups for targeted campaigns to facilitate maximum enrolment under Swavalamban Scheme. PFRDA has appointed many entities as Aggregators, such as, Government agencies, financial institutions, Civil Society Groups, Life Insurance Corporation of India, Public Sector Banks and Regional Rural Banks to strengthen the existing distribution network of NPS so as to maximize enrolment of subscribers under the Swavalamban Scheme.
4. The Government is committed to encourage the unorganized sector workers to join the Swavalamban Scheme so that they could lead a safe, secured and dignified life in their old age. The Finance Minister has formally launched the Swavalamban Scheme on 26.09.2010 at Jangipur (West Bengal)