Swavalamban Pension Scheme

Swavalamban Pension Scheme by Govt of India

The Swavalamban Pension Scheme, is one of the popular scheme launched by Govt of India which was originally initiated by by India’s Prime Minister Narendra Modi on 28 August, 2014. He had announced the scheme on 15 August, 2014 on his opening speech. The scheme was aimed for the retirement benefits for the self-employed, wage earners and farmers who fall under the unorganized section. This scheme has a record for the highest number of enrollment on the first day of inauguration. About 15 million accounts were opened on the inaugural day. By February 2016, 200 million bank accounts were opened and an amount of around 300 million dollars were deposited in the banks across India.

Swavalamban Pension Scheme by Govt of India

The scheme was proposed to provide an accessible and lucid access to bank facilities for all. It provides the following benefits:

1) Basic facilities: A zero balance account can be opened with an addition of RuPay Kisan debit card. The individual is entitled to all basic banking facilities.

2) Accidental Insurance: One lakh INR insurance is covered by the Government provided by HDFC Ergo.

3) Life Insurance: Bank accounts opened on or before 26 January, 2015 are also eligible for an insurance of thirty thousand rupees regulated by LIC.

4) Overdraft: An overdraft facility of INR 5000 can be obtained after six months on opening of bank account.

5) Fund Transfer: NPCI, National Payments Corporation of India, introduced a new technology which enables a person to check balance and transaction even through a normal phone which was earlier not possible.

6) Telephone companies and the Government are working in collaboration to enable phone banking facilities as well for the bank account holders.

7) Investment returns are high in terms of long term investment and there is no fixed interest. 15% of the total amount is invested in equity or shares and thus risk is less.

Eligibility criteria:

  1. Indian citizens falling under the unorganized section of the society are eligible between the ages 18-55 years. Unorganized sector comprises of people who is not employed by the State or Government agencies nor by any autonomous government undertaking which offers retirement benefits. This scheme is also for people do not fall under the Social Security Scheme which provides Provident Fund (PF) to the employees.
  2. Individuals falling under the unorganised category needs to be a member of the New Pension System (NPS) regulated by the Interim Pension Fund Regulatory and Development Authority (PFRDA).
  3. Account holders need to pay at least INR 1000 per fiscal year for benefits offered by the Government. No.of deposits per year is flexible. The maximum limit is INR 12,000. The Government contributes INR 1000 end of every year for the ones who are enrolled for the NPS account for the years 2010-2014.

If any of the aforementioned information is found to be false, the entire contribution from the Government will be deducted along with a penalty stated from time to time.

How to Apply?

  1. Enrollment can be done through contacting an aggregator or through the government website.
  2. All the details need to be filled in the form.
  3. Providing KYC documents are mandatory. (Identity proof and Address proof).
  4. A minimum contribution of INR 100 when registering needs to be provided.
  5. After a basic background check, the account holder receives the Permanent Retirement Account Number (PRAN) and can start receiving the benefits by the Government. A minimum of INR 1000 is required for the same per year.
  6. The CRA (Central Record Keeping Agency) reviews each account at the end of each financial year and send the details of eligible and non-eligible candidates to the PFRDA as well as the trustee bank. Only candidates who fall under the unorganised category get the benefits of the scheme.

Application form is available at http://www.pfrda.org.in/

Withdrawal policy is entertains pre-term withdrawal. The general exit is at the age of 60 years. Minimum annunciation amount is 40% of the total amount accrued.  In case of premature withdrawal, 80% of the amount is annuitized. In case of death of the account holder the entire amount is transferred to the nominee during registration. The nominee is eligible to either continue with same or withdraw the entire amount without any penalty charge.

Although it has several benefits for a section of the people of India, this scheme also has attracted negative attention. It is frequently termed as the source of bringing in more votes and over burdening the bank personnel. The records or financial statements over the past few years also have not shown any benefits to the Public Sector banks. With attractive benefits put across to the people, many duplicate and false bank accounts were opened and it has cumbersome to screen and reject ineligible accounts.

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