The Government of India has developed many pension schemes from time to time in order to make senior individuals in the unorganized sector financially secure and independent. One such project was the Swavalamban Scheme also known as the NPS Swavalamban Scheme. Furthermore, this initiative was aimed towards India’s unorganized sector, with the goal of assisting them in properly managing their finances. Swavalamban Scheme was a micro-pension plan funded by the government and overseen by the Pension Fund Regulation and Development Authority, or PFRDA. It was founded in 2010 with the goal of encouraging people to save for their retirement.
The pension plan’s characteristics and components aid in the process of creating a robust retirement corpus, allowing investors to become financially secure and self-reliant after retirement. The minimum investment amount under the Swavalamban Pension Yojana was Rs. 1000 per annum, with a maximum investment value of Rs. 12,000. In addition, over the next five years, the Indian government will donate Rs. 1000 per year to all active Swavalamban Scheme accounts.
It also set a record for the most number of applicants for a pension system on its first day of operation. Furthermore, by the year 2014, over 35 lakh people have enrolled in this pension plan and benefited from it. This scheme was, however, phased out in 2016 and replaced by the Atal Pension Yojana, a more comprehensive retirement-friendly plan.
Features of the Swavalamban Scheme
- Investment amount
Eligible candidates could register a Swavalamban Pension Scheme account with a minimum deposit of Rs. 100. Furthermore, investors were not required to contribute to their pension account on a yearly basis. The government, on the other hand, contributed Rs. 1000 each year for a minimum deposit of Rs. 1000 and a maximum deposit of Rs. 1200.
- Dependency on a bank
The Swavalamban Pension Yojana did not rely just on a bank account to function. Individuals having a bank account, on the other hand, had a distinct edge. It was due to the fact that the investment was made through bank accounts.
Unlike traditional savings plans such as FDs and PPFs, the rate of return on Swavalamban Pension Yojana was not fixed, owing to the fact that it was a market-linked program whose returns were heavily influenced by market forces.
- Target beneficiaries
The benefits of this pension plan were designed to aid India’s economically disadvantaged. Farmers, self-employed people, and those in the labor class, for example, were the principal targets.
- Funding and tax benefit
This pension system was funded by donations received by the Indian government. Investors were also eligible for tax incentives under this plan.
- Investing practices
There was no upper or lower limit on the amount of money that may be put into the Swavalamban Pension Yojana. Investors could put as little as Rs. 100 per month into this scheme. They also had the freedom to contribute as many times as they wanted in a given year.
- Investment diversification
Up to 15% of the total cash was to be placed on the stock market, while the remaining 55% was to be invested in government securities. Furthermore, the remaining 40% was invested in corporate bonds. This function proved to be beneficial to account holders, allowing them to diversify their risk greatly.
- Transactional statement
Annually, account holders of the Swavalamban Pension Yojana received a hard copy of their statement of transactions. It was seen as a critical instrument for keeping track of the specifics of each contribution made, as well as providing an accurate picture of the corpus accumulated.
- Nominee facility
Accountholders were also able to use the nominee service provided by this pension plan. Notably, it provided nominees with two options: they could either claim the accumulated amount of money in a flat sum or continue it according to the rules.
Individual savings were mobilized to construct a sizeable retirement fund in part due to these appealing attributes.
Swavalamban Pension Pension Yojana Benefits
The Swavalamban Yojana benefited its subscribers in the following ways:
- Diversified risk factor:
The PFRDA constantly monitored this plan, ensuring transparency in dealings and compliance with investment-oriented standards. As a result, it provided guaranteed returns and a large amount of potential income. One of the primary aspects that made Swavalamban Yojana a safe retirement-oriented investment plan was this aspect.
- Minimal investment amount:
Because there was no set monthly contribution or investment frequency, individuals were able to contribute money to the program whenever it was convenient for them. It also allowed account holders to earn money with as little as a Rs. 1000 monthly investment. It was a good investment plan for people with little resources because of the low participation required.
- Tax advantages:
The money received at maturity was also tax-free, allowing you to get the most out of your investment. As a result, individual funds were protected from deteriorating.
Swavalamban Pension Scheme Application Process
To complete the Swavalamban Pension Yojana – enrolling process, interested individuals have to follow the steps below.
- They were required to complete the NPS-Swavalamban application form, which was available both online and in person.
- Applicants were required to submit necessary KYC documents, such as evidence of identity and address.
- At the time of registration, individuals were asked to deposit a minimum of Rs. 100.
- Then they had to go to the nearest aggregator and submit their application form together with the appropriate documentation.
- They also have to contribute a minimum amount to finish the registration process.
- In addition, interested candidates could contact the aggregators via a toll-free number or SMS to obtain relevant Swavalamban Yojana Scheme information.
Applicant Eligibility for the Swavalamban Scheme
Individuals from the country’s unorganized sector were, in general, the intended beneficiaries of this pension scheme. Individuals were, however, required to meet a few eligibility criteria in order to earn money from it, such as –
- Citizens of India between the ages of 18 and 60.
- Not employed either by the State or the Central government frequently.
- Should not have been employed by an autonomous organisation or by a state or central government-owned public sector with enrolment in an employer-sponsored retirement plan.
- Should not have been covered by any social security program enacted under the following statutes:
- Employees’ Provident Fund and Miscellaneous Provisions Act, 1952
- The Employees’ Provident Fund Act of 1961 in Jammu and Kashmir
- Seamen’s Provident Fund Act,1966
- The Coal Mines Provident Fund and Miscellaneous Provisions Act, -1948
- The Assam Tea Plantations Provident Fund and Pension Fund Scheme Act, 1955
In 2016, the Swavalamban Pension Yojana was replaced by the Atal Pension Yojana, a better and more effective pension program. Existing pension system account holders were allowed to move to the Atal Pension Yojana and keep their government contributions. It also promised to make the process of accumulating a retirement fund easier by lowering the age group of investors from 18–60 to 18–40 years. Apart from that, there are a few things that both programs have in common. Interested investors can, however, research existing pension plans to make a more educated decision.