The finance ministry is considering a proposal to further extend the co-contributory Swavalamban scheme under the National Pension System by about three to five years to bolster the retirement savings of unorganised sector workers.
The interim regulator Pension Fund Regulatory and Development Authority (PFRDA) is understood to have pitched for a further extension on the grounds that pension is a long term product.
“Our calculations reveal that for a worker will have to save Rs 1,000 per month for at least 20 years to have a basic corpus of Rs 2 lakh. Pension is a long term product and Central contribution will promote savings by low income groups,” a senior PFRDA official said.
Membership to NPS Lite has touched 12.6 lakh while Swavalamban currently has over 7 lakh accounts. The finance ministry wants to bring around 40 lakh workers into the contributory pension scheme’s fold.
“Financial aspects have to be still examined. Extending the scheme by three years required additional funding support from the Centre of Rs 2,065 crore,” a senior official said, adding that if accepted, a decision could be announced in Budget 2013-14.
Launched by the UPA in 2010, Swavalamban scheme is a co-contributory pension scheme where the Centre contributes an annual Rs1,000 in each NPS account having a saving of Rs 1,000 to Rs 12,000 per year. The scheme, which is a part of the low cost NPS Lite targets anganwadi workers, construction workers, occupational classes like weaver, fishermen, farmers, dairy workers was last April extended from 2013-14 by a period of three years to 2016-17.