NPS Swavalamban Yojana

What is Swavalamban Yojana Scheme?

Administered by the Pension Fund Regulatory and Development Authority (PFRDA), the Swavalamban Pension Yojana was launched in 2010 as a micro-pension plan. It encouraged individuals to save for their retirement by allowing them to accumulate a substantial corpus. The scheme gained popularity, attracting over 35 lakh subscribers by 2014. However, in 2016, it was discontinued and replaced by the Atal Pension Yojana.

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What are the Features of the Swavalamban Yojana Scheme?

Below are the features of Swavalamban Yojana Scheme:

1. Flexible Investment:

   Individuals could start with a minimum investment of Rs. 100, and annual contributions ranging from Rs. 1,000 to Rs. 12,000 attracted government contributions.

2. Bank Integration:

   While not mandatory, a bank account facilitated seamless transactions.

3. Market-Linked Returns:

   Unlike fixed-return schemes, returns were market-dependent, offering potential for higher growth.

4. Targeted Beneficiaries:

   The scheme primarily aimed to benefit economically vulnerable groups, including farmers, self-employed individuals, and laborers.

5. Government Funding and Tax Benefits:

   The scheme was funded by government grants, and investors enjoyed tax exemptions on withdrawals.

6. Diversified Investment Portfolio:

   Funds were invested across equity (15%), government securities (55%), and corporate bonds (40%), spreading risk.

7. Transparent Transactions:

   Account holders received annual transaction statements.

8. Nominee Facility:

   Subscribers could designate a nominee to receive the accumulated funds.

What are the Benefits of NPS Swavalamban Pension Scheme?

Below are the benefits of NPS Swavalamban Pension Scheme:

1. Low Investment Requirement

   With a minimum annual investment of Rs. 1,000, the scheme was accessible to individuals with modest incomes, particularly those in the unorganised sector. This allowed people with unpredictable earnings to participate in a retirement savings plan without financial strain.

2. Diversified Investment for Reduced Risk

   By allocating funds across different instruments such as equity, government securities, and corporate bonds, the scheme ensured risk diversification. This approach minimised potential losses and enhanced the chances of stable returns over time.

3. Government Co-Contribution

   The government’s annual contribution of Rs. 1000 for five years provided additional financial support to subscribers. This helped in boosting their retirement corpus and ensuring a more secure post-retirement income.

4. Tax Exemptions

   Subscribers enjoyed tax benefits on contributions under Section 80CCD of the Income Tax Act. Additionally, the maturity amount was tax-free, ensuring that retirees could access their savings without financial deductions.

5. Retirement Security and Financial Independence

   The scheme aimed to provide long-term financial stability by ensuring a steady income for subscribers post-retirement. This was particularly beneficial for individuals in the unorganised sector who lacked access to formal pension plans or employer-sponsored retirement benefits.

6. Nomination Facility for Family Protection

   In case of the subscriber’s unfortunate demise, the nominee could inherit the accumulated corpus, ensuring financial support for dependents. This aspect added a layer of security for the family members of the subscriber.

How to Apply for the NPS Swavalamban Scheme?

To apply for the scheme, individuals needed to:

• Obtain an application form through online or offline channels.
• Submit the filled form with KYC documents and an initial deposit of at least Rs. 100.
• Approach the nearest designated aggregator to complete the registration process.

Eligibility Criteria for the NPS Swavalamban Yojana Scheme

To be eligible for the Swavalamban scheme, an individual had to:

• Be between 18 and 60 years old.
• Fulfill KYC requirements.
• Be an Indian citizen (NRIs were not eligible).
• Not be enrolled in other social security programs such as EPF or the Coal Mines Provident Fund.

Exit or Withdraw Rules Process of Swavalamban Yojana Scheme

1. On-Time Withdrawals

   • At the age of 60, subscribers had to invest 40% of their corpus in an annuity plan, providing a minimum monthly pension of Rs. 1000.
   • If the 40% was insufficient, a higher percentage had to be invested.

2. Premature Exits

   • If a subscriber exited before 60, they were required to invest at least 80% of their corpus in an annuity, with the remainder available for withdrawal.

3. Death Benefit

   • In case of the subscriber’s demise, the nominee could withdraw the full corpus, ensuring financial stability for the family members.