The insurance regulator IRDAI, however, is yet to announce the rate of interest for first year of operation. The scheme will be administered by the Life Insurance Corporation of India.
The rate of return in a similar scheme of pension -- Atal Pension Yojna (APY) -- has been around 7.5 per cent. But to make PMSYM more attractive so that the poor part with their meagre funds for insurance, the rate of return has to be at least near the formal sector pension fund rates, if not same, a government source said adding, however, that IRDAI will decide the rate.
A higher rate will make people enroll for the scheme since they will see equal government contribution and higher interest rates, the official said, adding the poor have to be marketed these benefits very well or else the scheme may meet the fate of APY. Here, he said, LIC will have a bigger role. Officials said looking at the one-year response, the scheme may go for more modifications.
The PMSYM is a slightly better variant of Atal Pension Yojna of 2015 in terms of benefits which has a subscriber base of 10.5 million as against its target of 20 million by the and of 2015, as per official data. The informal sector has 42 crore people, according to the 2011 census.
In PMSYM, the individual has to contribute a fixed monthly amount till reaching 60 years of age, while an equal amount is put into the account by the government and thereafter, from age 60, he or she will start getting pension of Rs 3,000 for lifetime.
Made on the lines of the EPF scheme for the workers in the organised sector wherein 12 per cent of basic salary goes into employees' provident fund while an equal contribution is made by the employer, the scheme, government hopes, will make the poor part with their small incomes with attractive rate of interest, an official said.
Anyone older than 40 is ineligible for the new scheme.
The announcement in the interim Budget ensures that the unorganised sector workers earning up to Rs 15,000 a month get a monthly pension of Rs 3,000 after they attain the age of 60. Workers between the ages of 18 and 40 years qualify for the scheme. The target of the government is to include 10 crore informal sector workers. The amount of monthly contribution is based on age and has to be paid till the age 60.
A worker who joins the new scheme at the age of 18 will have to contribute Rs 55 a month and a matching amount will be contributed by the government. Those above 29 years will have to contribute Rs 100 every month (to make up for late entry, which reduces the total lifetime contribution).
From age 60, a fixed monthly pension of Rs 3,000, irrespective of the age, starts till lifetime of an individual. If the death occurs during the period of pension, the spouse starts getting family pension equal to half of what was being paid to the individual.
In PMSYM, the individual has to contribute a fixed monthly amount till age 60, while an equal amount is put into the account by the government and thereafter from age 60, one will start getting pension for lifetime. PMSYM has resemblance of the EPF scheme for the workers in the organised sector wherein 12 per cent of basic salary goes into employees provident fund while an equal contribution is made by the employer. The idea is to let workers (organised and unorganised) save towards their retirement to meet a dignified life.
This scheme will be open only to the unorganised worker whose monthly income does not exceed Rs 15,000 and who has a savings bank account and Aadhaar number.