Finance Minister Piyush Goyal in his Budget 2019 speech had proposed to launch a pension scheme namely ‘Pradhan Mantri Shram-Yogi Maandhan’ (PMSYM) for the unorganised sector workers. The defined-benefit pension scheme is formally going to be launched on February 15, 2019.
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, he or she 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.
How PMSYM works
PMSYM is open only for those workers who are in the unorganized sector and are between the age of 18 and 40 years. The amount of monthly contribution is based on age and has to be paid till age 60. (see chart below) An equal amount every month will be contributed to the individual s PMSYM account.
From age 60, a fixed monthly pension of Rs 3,000 irrespective of the age starts getting paid till lifetime of the 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. After death of subscriber and his or her spouse, the corpus shall be credited back to the Pension Fund of the government.
This Scheme shall be open only to the unorganised worker whose monthly income is not exceeding Rs 15,000 having a savings bank account and Aadhaar number. The unorganised workers who are working or engaged as home based workers, street vendors, mid-day meal workers, head loaders, brick kiln workers, cobblers, ragpickers, domestic workers, washer men, rickshaw pullers, landless labourers, agricultural workers, construction workers, beedi workers, handloom workers, leather workers, audio- visual workers and similar other occupations.
Age based pension
Let us look at a real life example. As per the notification, someone who is age 30 has to pay a monthly amount of Rs 105 till age 60. In total, the individual would have paid Rs 37,800 while an equal amount is contributed by the government.
Targeted towards unorganised workforce, one may inform and guide the workers in one’s own home and neighborhood to take advantage of this scheme. With IMPS and other digital mode of payments in vogue, one may even consider contributing on behalf of the individual working for you.