Budget 2019: Government Announces Pension Scheme For Unorganised Sector Workers
The Narendra Modi government launched a pension scheme for workers in the unorganised sector—titled Pradhan Mantri Shram-Yogi Maandhan.
Union Finance Minister Piyush Goyal in his budget speech for 2019-20 on Friday announced that workers in the unorganised sector earning up to Rs 15,000 a month shall receive a monthly pension of up to Rs 3,000 after the age of 60.
A worker at the age of 18 will have to contribute Rs 55 a month, while those above 29 years will have to contribute Rs 100 every month. The government would match the contributions.
The finance minister allocated Rs 500 crore for the scheme in the current fiscal year.
The move will benefit 42 crore unorganised workers such as street vendors, rickshaw pullers, agriculture labourers, workers in the leather, handloom, construction, beedi-making industries, rag pickers and domestic workers, according to Goyal’s budget speech. These workers, he said, are part of the country’s informal sector, which contributes to half of its gross domestic product. “We must provide them comprehensive social security coverage for their old age.”
How Is This Different From Atal Pension Yojana?
Pradhan Mantri Shram Yogi Mandhan is a restructured version of the Atal Pension Yojana—also co-contributed by the central government—for unorganised workers and those who aren't covered under any formal pension scheme. The erstwhile scheme, which came into effect in June 2015, allowed subscribers between the age of 18 years and 40 years to receive pension after reaching 60 years.
Under the earlier scheme, the beneficiaries were supposed to contribute for at least 20 years to avail the pension benefit. The minimum monthly contribution for a subscriber who joined the scheme at 18 years was Rs 42-210 and for those who joined at 40 years, it was Rs 291-1,454 to receive a fixed Rs 1,000-5,000 monthly pension.
The new pension scheme offers Rs 3,000 per month benefit at a minimum contribution of Rs 55 for those who joined at 18 years compared with a monthly contribution of Rs 126 under the earlier scheme to avail the same benefit.
The central government’s co-contribution under the new scheme also increased to 100 percent of the subscriber’s total contribution from the earlier 50 percent or Rs 1000 per annum that it paid under Atal Pension Yojana.
About 78.42 lakh beneficiaries had enrolled under Atal Pension Yojana as of Dec. 20, 2017. The budget allocation fell from Rs 200 crore for 2016-17 to Rs 155 crore in 2018-19, as per the budget estimate.