Currently, the workers in the unorganised sector do not access to pension schemes such as NPS, however, they can subscribe to Atal Pension Yojana (APY).
Under the APY, subscribers are entitled to receive guaranteed minimum pension of Rs. 1,000 or 2,000 or 3,000 or 4,000 or 5,000 per month will be given at the age of 60 years depending on the contributions by the subscribers.
Details of the new pension plan
The new pension plan which the labour ministry is contemplating will be open to salaried employees and the self-employed persons as well.
This new proposed plan will be different from such plans as EPFO in a way that contributions to EPFO will be on voluntary basis and the government will not make any contribution towards the pensioners’ accounts, wrote NDTV further.
The key idea is to offer a ‘universal pension scheme’ i.e., to streamline the pension/savings framework in the country by likely subsuming a few existing schemes.
The new scheme will not replace or subsume the current National Pension System (NPS), which also happens to be a voluntary pension scheme, sources asserted.
Stakeholder consultation will kick off after the proposal document is completed, sources said.
Notably, the central government recently announced Unified Pension Scheme (UPS) as a sub-set of National Pension System. In other words, this will be available as an option under the National Pension System for government employees.
The National Pension System was earlier rolled out for government employees but was later extended to private sector employees as well.
Just like EPF and PPF, it is an EEE (Exempt-Exempt-Exempt) instrument where the entire corpus is exempt from income tax at maturity and the entire pension withdrawal amount is tax-free.
