Investments in the new pension scheme (NPS) is proving to be doubly profitable for unorganised sector workers.
Following the central government, states are coming to the fore to contribute Rs 1,000 a year to NPS accounts. Haryana and Karnataka have already started contributing, and according to sources some more states are planning to join these two. This will lead to the total government contribution per account to Rs 2,000 a year.
The Pension Fund Regulatory Development Authority (PFRDA) is on the verge of finalising all modalities of the scheme, and about 1million NPS subscribers in the unorganised sector will be benefitted by this scheme. Even the Non-government organisations and self-help groups have also come forward to join the scheme. But, PFRDA is quite selective in including people in this scheme. Several other groups are also interested in implementing this scheme.
To encourage people from the unorganised sector to save and to lower the cost of operation for them, Finance Minister Pranab Mukherjee said in his Budget speech that the government would contribute Rs 1,000 per year to each NPS account opened in 2010-11 and the scheme would be open for another three years.
He also made an allocation of Rs 100 crore for the scheme in 2010-11 and egged on all the state governments to contribute a similar amount that will help in providing social security to the weaker sections of society. This scheme called Swavalamban, will be available for those who join NPS with a minimum contribution of Rs 1,000 and a maximum contribution of Rs 12,000 per annum during financial year 2010-11.
The low-cost account of NPS has been operational since April 1 and PFRDA expects Swavalamban to help the new subscribers too. An investment of Rs 3,000 a year (Rs 1,000 each from the Centre, the state government and the subscriber) will take the total invested corpus to Rs 90,000 after 30 years.
The number of NPS subscribers has touched 7,85,000, taking the corpus to Rs 4,158 crore. The number of non-government subscribers, which joined the scheme after May 1 last year, has reached 4,100. PFRDA has added 20 more points of presence in the two latest rounds, taking the total to 41.
