The pension scheme aims to cover around five crore beneficiaries in the first three years.
It will be a voluntary and contributory pension scheme with entry age of 18 to 40 years. The beneficiary can opt to become member of the scheme by subscribing to a pension fund.
"The Central government shall also contribute to the Pension Fund in equal amount. Contribution shall be made to a Pension Fund managed by the LIC which will be responsible for the pension pay out," said an official statement.
"Under the scheme farmers can also opt to allow contribution to be made directly from the benefits drawn from the PM-KISAN scheme. There will be an online grievance redressal system for complete transparency."
The pension scheme for small and marginal farmers will provide a social security net for all such farmers, the ministry said.
Union Agriculture Minister Narendra Singh Tomar on Thursday spoke to Agriculture Ministers of all states and Union Territories regarding rolling out of the pension scheme.
He asked them to create awareness about the scheme.
He also asked the ministers to expedite the process of enrolment of all eligible farmers in a time-bound manner so that the benefit under PM-KISAN for the period from April to July, 2019 can be transferred directly to their bank accounts.
PM-Kisan Yojna is an income support scheme for farmers in which Rs 6,000 per year is given in three equal instalments
Tomar also sought organisation of village-wise campaign to cover one crore farmers under the Kisan Credit Card Scheme within the next 100 days.