Swavalamban Pension Yojana – Concept, Features, Benefits, Application Process & more
Last Updated Date: Nov 17, 2022Back in 2010, the UPA government launched Swavalamban Pension Yojana. It is also known as NPS Swavalamban.
Under the scheme, the subscribers need to contribute Rs.1000 per month. Rs.1000 amount is then matched with Rs.1000 from the central government.
Rs.1000 is the minimum annual contribution, while Rs.12000 is the maximum yearly contribution. Pension Fund Regulation and Development Authority administers it.
But back in 2016, the scheme was discontinued and was replaced by Atal Pension Yojana (APY).
About Swavalamban Pension Yojana
From time to time, the government of India has launched several pension schemes.
These pension schemes aim to help senior citizens from the unorganized sector to be financially independent post-retirement.
One such endeavor was Swavalamban Pension Yojana or the NPS Swavalamban.
The scheme was focused on the unorganized sector of the country, and it aims at helping them manage finances.
The scheme was a government-backed scheme and was formulated with the aim of insulating money saving habits among people.
Further, the features and components of the pension led to the growth of a significant retirement corpus.
In all the active accounts under the scheme, India’s government contributed a sum of Rs.1000 per annum for five years.
On the first day, the introduction saw an achievement of the maximum number of applicants. Hence, back in 2014, at least 35 lakh people had subscribed to this pension plan.
But in 2016, Atal Pension Yojana replaced the scheme.
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Features of Swavalamban Pension Yojana
Some of the main characteristics of this scheme is –
Investment Amount
Eligible candidates could open the account under this scheme with a minimum sum of Rs.100. Furthermore, there is no need to contribute to the pension account yearly.
But you need to know that a minimum contribution of Rs.100 and a maximum contribution of Rs.1200 annually could fetch Rs.1000 from the government.
Bank Dependence
The scheme was not dependent entirely on any bank. But people with bank accounts were at a more significant benefit.
It was mainly because the investment was linked through their bank.
Returns
The rate of returns applied under the Swavalamban Scheme was not fixed like other schemes.
It was mainly because the scheme was market-linked, and the returns primarily depended on the market.
Targeted Beneficiaries
The pension plan’s benefits were mainly targeted towards the economically weaker sections of the society.
It includes mostly farmers, self-employed people from the labor class, etc.
Funding and Tax Benefit
The government of India received some grants, and the same was used to fund the pension scheme.
Additionally, under this scheme, the investors were eligible to avail of tax benefits. The best part of the scheme was the amount was wholly exempted from tax.
The Pattern of Investment
On the amount of contribution directed towards the Swavalamban Scheme, there was no maximum or minimum investment.
Investors could even deposit Rs.100 into the scheme every month. Furthermore, they were free to contribute under the scheme as many times they wanted to.
Investment Diversification
At least 15% of the total contribution was invested in the equity market. On the other hand, 55% of the contribution amount was invested in government securities.
Additionally, 40% of the contribution amount was invested in corporate bonds. It was a useful feature for account holders, mainly because it allowed them to safely diversify the risk’s burden.
Transaction Statement
Under the scheme, the account holders received a hard copy of their transaction every year. It is said to be an essential tool to keep an eye on the details of all contributions made.
Additionally, it gives a clear idea about the corpus built.
Nominee Feature
The scheme allowed the account holders to avail the nomination facility. Well, the nominee had an option to either avail the beneficiary amount in a lump sum or continue it as per rules.
Thus, the fantastic features of the scheme played a crucial role in mobilizing funds towards building a massive retirement corpus.
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Advantages of Swavalamban Pension Yojana
Here are the major benefits of Swavalamban Pension Scheme –
Risk Factor Diversified
The PFRDA monitored the scheme closely. It ensured that dealings were transparent and also adhered to the investment-oriented rules.
Additionally, there was also an extension towards assured returns and offered a great scope to generate income.
Hence, this benefit was one of the significant factors which made Swavalamban Yojana a safe retirement-oriented investment scheme.
Minimum Investment Amount
As there was no bar on the investment amount; the investors were allowed to contribute as per their budget.
Additionally, investors could earn a return even on the investment of as little as Rs.1000. Thus, the scheme was popular among individuals with limited means.
Tax Benefits
Investors could maximize the returns as the amount received on maturity was wholly exempted from tax.
Additionally, it protected the investor’s savings from eroding completely.
Application process of Swavalamban Pension Yojana
- Firstly the investors had to fill the NPS-Swavalamban application form. It was available both online and offline.
- Along with the form, the applicants had to attach the mandatory documents required for KYC. It served as identity proof.
- At the time of registration, the individuals need to pay Rs.100.
- To the aggregator, the individuals had to submit both the application form and set of documents.
- Lastly, they had to make a minimum contribution to complete the registration process.
Besides, these if individuals had any query, they could freely connect with aggregates through the toll-free number or email.
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Eligiblity Criteria under Swavalamban Pension Yojana
In the broader term, the targeted beneficiaries under the scheme belonged to the unorganized sector of the country.
But to avail of the benefits, the individuals had to meet some requirements:
- Beneficiaries age group is 18 to 60 years, and they must be citizens of India.
- The beneficiaries should not be employed either with the State or the Central government. They should also not be used by the autonomous body.
- The beneficiaries should not be covered under any other social security scheme.
Some of the social security schemes include
- The Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948
- Employees’ Provident Fund and Miscellaneous Provisions Act, 1952
- The Assam Tea Plantations Provident Fund and Pension Fund Scheme Act, 1955
- The Seamen’s Provident Fund Act, 1966
- The Jammu and Kashmir Employees’ Provident Fund Act, 1961
Conclusion – Swavalamban Pension Yojana
As of now, the Swavalamban Pension Yojana is not under practice. It is mainly because the scheme was replaced in 2016 with an improved and more effective pension scheme.
The scheme is known as Atal Pension Yojana. The existing account holders of the Swavalamban Pension Scheme were automatically transferred to this scheme.
Above all, their contributions were also retained. The age bracket of investors was reduced to 18–40 years. Hence, we can say that both the schemes share a lot in common.
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