One of the government’s mega budget announcements, a ₹3,000 per month pension for unorganised sector workers once they turn 60, excludes those above the age of 40, doesn’t allow for children of subscribers to be made nominees, and has stringent exit norms, according to details contained in the notification of the scheme issued on Thursday.

Unorganised sector workers can enter the scheme as early as the age of 18 by contributing ₹55 per month. The latest they can subscribe to the scheme is at the age of 40 by paying ₹200 monthly, the notification by the ministry of labour and employment said. The central government has committed to contribute an equal amount.

According to the notification, labourers above the age of 40 years cannot join the scheme. The scheme, the ‘Pradhan Mantri Shram Yogi Maan-dhan, 2019’ for was announced in the interim budget on February 1, and targeted a major constituency of about 400 million unorganised workers in both urban and
rural India.

The labour ministry said after finance minister Piyush Goyal’s budget speech that the scheme would benefit 100 million workers in the informal sector, including domestic helps like maids, cooks and housekeepers in addition to those who work in small, informal business establishments who earn up to ₹15,000 per month. “Half of India’s GDP comes from the sweat and toil of 42 crore [420 million] workers in the unorganised sector working as street vendors, rickshaw pullers, construction workers, rag pickers, agricultural workers, beedi workers, handloom, leather and in numerous other similar occupations,” Goyal said.

“Domestic workers are also engaged in big numbers. We must provide them comprehensive social security coverage for their old age,” he added.

According to the notification, an Aadhaar-linked savings bank account is one of the pre-requisites for joining the scheme; a monthly salary ceiling of ₹15,000 is another. The scheme has exit options, but subscribers exiting it will lose benefits. “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,” the notification said. If an eligible subscriber exits the scheme after the completion of 10 years or more from the date of joining the pension fund, but before turning 60, then his or her share of contribution only will be returned along with accumulated interest as actually earned by the pension fund.

In both cases, the government’s contribution will stay with the pension fund.

If an eligible subscriber dies before the age of 60, the spouse can continue with the scheme subsequently by paying the monthly contribution till the time the subscriber would have turned 60 and then avail of the pension, or exit by receiving the share of contribution paid by such a subscriber along with accumulated interest actually earned by the pension fund.

In this case too, the government’s contribution will stay with the pension fund.

After the death of the subscriber, the spouse will be eligible for the pension benefits, but children of the subscriber will not be entitled to them. The central government may, however, amend any other exit provision, including nomination by issuing instructions from time to time, the notification said.

Alakh N Sharma, a labour economist and director of the Institute for Human Development said that the scheme could have been “better drafted” and should have been “more inclusive”. “The income criterion will require income certificate, which will be a daunting task for poor workers. Ideally, it should be universally applicable, even if the amount could have been reduced to ₹2,000 per month. Only people working in the organised sector and income tax payee should have been excluded,” he said.

The notification also clarifies that unorganised workers covered under other such schemes such as the National Pension Scheme, Employees’ State Insurance Corporation scheme or Employees’ Provident Fund will not be eligible to join the scheme. Income-tax assesses are also excluded from the scheme, the notification added.

First Published: Feb 08, 2019 23:43 IST