NEW DELHI: Pension Fund Regulatory and Development Authority (PFRDA) has suggested that the government must make a matching contribution to the subscribers’ share for the Atal Pension Yojana (APY), which is meant for the unorganized sector. A similar scheme, the Prime Minister Shram Yogi Maandhan (PM-SYM), was also launched last month for informal sector workers.
In an interview, PFRDA chairman Hemant Contractor said that the regulator has sought similar incentive, pertaining to co-contribution for APY, since floating ‘competitive schemes’ doesn’t serve the purpose.
Contractor said that while both schemes have similar features, the key benefit of the PM-SYM is that the government will deposit an equal matching share in the pension account of a worker every month, which gives this scheme an edge over the APY.
“The only salient difference is that in the new scheme, the government is going to co-contribute. So the contribution burden on the subscriber will be less by 50%. Fifty percent of the contribution cost will be picked up by the government. That is the major difference," Contractor said.
“So, when the new government scheme was announced, we took it up with the government that instead of floating a different scheme, the same incentive could be given to Atal Pension Yojana because it is already an established scheme and it has been running successfully for the last three years," he added.
Even if the government were to contribute 50% to APY, it will only cost ₹500-600 crore annually to the exchequer, which is not a huge burden, said the PFRDA chairman.
The new pension scheme for unorganized sector workers with monthly income of up to ₹15,000 was announced in the interim budget. It assured monthly pension of ₹3,000 to subscribers when they reach 60.
The subscribers are required to contribute a small amount every month during their working years. The government will also make an equal monthly contribution in the worker’s pension account. The scheme, which is under the administrative control of the labour ministry, is expected to benefit at least 100 million labourers and workers in the unorganized sector.
APY, the government’s scheme promoting social security, is handled by PFRDA and targets a similar customer base and provides fixed pension options of ₹1,000, ₹2,000, ₹3,000, ₹4,000 and ₹5,000 on the basis of the contribution. However, the government will make 50% co-contribution of the total amount or ₹1,000 per annum, or whichever is lower, for a period of five years, for subscribers who opted for the scheme between June and December 2015.