Voluntary pension scheme for small traders, unorganised workers under EPFO
Centre likely to announce Voluntary pension scheme for small traders, unorganised workers under Employees Provident Fund Organisation (EPFO)
The labour ministry is readying a plan to bring the existing voluntary pension scheme for small traders and unorganised workers under the ambit of the Employees Provident Fund Organisation. The idea is to make the two schemes more attractive besides simplifying implementation after these schemes have failed to draw significant subscribers even after a few years of launch.
“We are looking at bringing the Pradhan Mantri Shram Yogi Maandhan for unorganised workers and the National Pension Scheme for traders and self-employed persons under the administrative control of EPFO,” an official aware of the deliberations told ET.
The discussions are currently underway on whether EPFO floats something entirely new to extend its coverage to individuals or bring the above two schemes in its fold, another official said on the condition of anonymity.
“However, EPFO doesn’t have the experience of handling individual contributions without the intervention of an employer. Hence, a lot of preparations will have to be done,” the second official added.
The Code on Social Security, 2020, provides the government to frame any other scheme or schemes for the purposes of providing social security benefits under this Code to self-employed workers or any other class of persons.
Besides, it also enables the government to modify any such existing scheme by adding thereto, amending or varying therein, either prospectively or retrospectively. The labour ministry is currently drafting the Rules for the code and aims to roll it out from April 1, 2021 along with other three codes.
However, experts feel more has to be done. “There is a need for adequate incentives, stability and effective dissemination to make these schemes attractive,” labour expert KR Shyan Sundar said. “While EPFO has the requisite infrastructure to do this, its governance and management system will also have to undergo significant change,” he added.
Currently, the labour ministry driven PM-SYM and National Pension Scheme for traders is administered by the Life Insurance Corporation of India. Under the PM-SYM, launched in February 2019, an unorganised sector worker between 18 and 40 has to contribute Rs 55-200 per month, while the Centre makes a matching contribution. This makes the subscriber eligible for a minimum assured pension of Rs 3,000 per month for life on attaining the age of 60. As on date, there are over 44 lakh subscribers to the scheme.
Likewise, the government launched the National Pension Scheme for traders and self-employed persons in 2019. Under this, retail traders, shopkeepers and self-employed persons whose annual turnover does not exceed Rs. 1.5 crore and who is not an income tax payee, becomes eligible for pensions at the age of 60 years after making monthly contributions under the scheme which is matched by the Centre. However, no data is available on the public domain on the subscription to the scheme since its launch.