Govt prescribes ‘lock-in’ for pension scheme for unorganised-sector workers

The government has prescribed a ‘lock-in’ period for its contribution in the new pension scheme — Pradhan Mantri Shram Yopgi Maan-Dhan (PMSYM) — designed exclusively for the informal sector workers. The scheme, announced in the Interim Budget, came into operation from Friday.

One can join the scheme between the age of 18 to 40 years and he/she will be required to contribute maximum of 42 years and minimum of 20 years. One needs to enroll for the scheme from the Common Service Centre. The person should have a mobile phone, bank account, and Aadhaar number. Enrollment will be on the basis of self certification and subsequently enrollment will be possible through mobile app also.

The scheme will help the subscriber get monthly pension of ₹3,000 after attaining the age of 60 years.

The scheme prescribes equal matching contribution by the government. This means if a worker deposits ₹100, then same amount will be contributed by the government. The ‘lock-in’ means the subscriber will get the government’s share only after he or she attains the age of 60.

Scheme guidelines

Detailed guidelines for the scheme said, “In case an eligible subscriber exits this scheme within a period of less than 10 years from the date of joining the scheme by him, then the share of contribution by him only will be returned to him with savings bank rate of interest payable thereon.”

Also, it has been said that if the exit is after completion of a period of 10 years or more from the date of joining the scheme but before age of 60 years, then the subscribers share of contribution only shall be returned along with accumulated interest thereon as actually earned by the Pension Fund or the interest at the savings bank interest rate thereon, whichever is higher. In case of earlier withdrawal, the accumulated share of government’s contribution will be credited back to the Pension Fund.

The unorganised workers include those mostly engaged as home-based workers, street vendors, mid-day meal workers, head loaders, brick kiln workers, cobblers, rag pickers, domestic workers, washermen, rickshaw pullers, landless labourers, own account workers, agricultural workers, construction workers, beedi workers and people in similar other occupations whose monthly income is ₹15,000 a month or less and are in the age group of 18-40 years. They should not be covered under the New Pension Scheme (NPS), Employees State Insurance Corporation (ESIC) scheme or Employees Provident Fund Organisation (EPFO). Further, he/she should not be an income tax payer.

If an eligible subscriber has given regular contributions and dies due to any cause, the spouse can continue subsequently by payment of regular contribution as applicable or exit by receiving the share of contribution paid by such subscriber along with accumulated interest. After death of subscriber and his or her spouse, the corpus shall be credited back to the fund.

Default in payment

If a subscriber makes a default in the payment of any contribution then, he/she will be allowed to regularise the contribution by paying entire outstanding dues, along with interest of the rate as determined by the government. Fund for the scheme and pension payout will be managed by Life Insurance Corporation of India (LIC).

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