The Pension Fund Regulatory and Development Authority (PFRDA) will launch a low-cost pension scheme on April 1 to provide social security cover to economically weaker sections like rickshaw pullers, barbers and daily-wage labourers.
"We would launch a low-cost pension scheme from April 1, 2010. Individuals could join the scheme as part of a self-help group," a PFRDA official told PTI.
Under the new pension scheme, a subscriber will have to initially pay Rs 105 and after that Rs 70 every year for maintenance of account. For normal scheme, the joining and annual charges are Rs 470 and Rs 350, respectively.
"Besides the initial payment, the account holder under the new scheme will have to pay Rs 35 to obtain Permanent Retirement Account Number (PRAN)," the official added.
There would be no lower limit for contribution to the pension fund, the official said, adding the Self-Help Group (SHG) can play a major role in popularising the scheme and supplementing the efforts of the government to promote financial inclusion and provide social security to a large number of people.
Initially, the government launched the New Pension System for central government employees joining service from January 1, 2004, but from May 1 this year it was extended to all citizens.
The response to the all citizens’ pension scheme has, however, been lukewarm in the first few months.
According to information available on the PFRDA website, only 2,818 subscribers have joined the scheme till December 5.
The official further said the investment in the low cost pension scheme should only be made as a group though the subscribers would be allowed to maintain their individual accounts.
"There would be no minimum limit paid by the subscriber for the corpus. So the investment made for the corpus should only be made as a group," the official said.
Under the present structure, a person has to deposit a minimum of Rs 6,000 each year into his account.
The withdrawal of money from the corpus would follow the same rules as the existing structure.
At present, only 20 per cent amount can be withdrawn as lump sum if a subscriber wants to withdraw his pension corpus before the age of 60.
The subscriber has to invest at least 80 per cent to purchase a life annuity from any IRDA-regulated life insurance company.
In case of death, options would be available to the nominee to receive 100 per cent of the NPS pension wealth in lump sum.
There are six fund managers for the citizens’ scheme. These include IDFC Mutual Fund, Kotak Mahindra, SBI, UTI Asset Management, ICICI Prudential Life Insurance and Reliance MF.