The New Pension Bill

The Rajya Sabha passed the Pension Fund Regulatory and Development Authority (PFRDA) Bill, which will help extend pension cover to more citizens of the country through PFRDA's New Pension Scheme (NPS).

• The main objective of the bill is to help extend pension cover to more citizens of the country through PFRDA's New Pension Scheme (NPS). Currently just 12 percent of the workforce in the country has any formal pension or social security plan.

• The passage of the Pension Bill will make Pension Fund Regulatory and Development Authority (PFRDA) a statutory authority. Earlier it had a non-statutory status.

• The Pension Bill would also provide subscribers a wide choice to invest their funds, depending on their capacity to take risk. A subscriber seeking minimum assured returns can opt for schemes providing minimum assured returns, as may be notified by the PFRDA.

• NPS is a defined contribution scheme and is based on the principle that 'you save while you earn'.

• The provisions of the Pension Bill will not apply to Employees Provident Fund Organisation (EPFO) subscribers. EPFO funds will be continued to be managed by the government.

• The Pension Bill allows foreign direct investment in the country's pension sector, the latest attempt by the government to attract more capital flows. Overseas investors can own stakes of up to 26% stake in domestic pension funds, or such percentage as may be approved for the insurance sector, whichever is higher etc.

• NPS was opened up for all citizens of the country including unorgnised sector workers, on voluntary basis, with effect from 1 May 2009.

• To encourage workers from the unorganised sector to voluntarily save for their retirement via NPS, the government launched the co-contributory pension scheme titled "Swavalamban Scheme" of NPS in the Budget of 2010-11. 

Swavalamban Scheme

Objectives:

1. To encourage the people from the unorganized sector to voluntarily save for their retirement.
2. To lower the cost of operations of the New Pension Scheme (NPS) for such subscribers.

Key Points:

1. Government contributes Rs. 1000 per year to each NPS account opened.
2. Govt does a minimum contribution of Rs. 1000 and a maximum contribution of Rs. 12000 per annum.
3. The then Hon’ble Finance Minister, Shri Pranab Mukherjee has launched the Swavalamban Scheme on 26.09.2010 at Jangipur (West Bengal).
4. Managed by the interim Pension Fund Regulatory and Development Authority.
5. The Operational Guidelines on Swavalamban are available on the PFRDA’s website at http://pfrda.org.in. 
6. Swavalamban Scheme was initially announced for three years.
7. Has now been extended to five years.
8. This scheme is open to those citizens of India who are not part of any pension/provident scheme. 
9. Relaxations have been provided in the exit norms of the Scheme to encourage more participations
10. 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.
11. A budget provision of Rs.110 crore in RE 2011-12 and Rs. 220 crores in RE 2012-13 has been made for the scheme.