The Union Cabinet on Thursday lowered the age limit for the Indira Gandhi National Old Age Pension Scheme (IGNOAPS) from 65 years to 60 years and increased the rate of pension from R200 per month to R500 per month for persons aged 80 and above, with effect from April 1, 2011. As a results of this change, the eligibility criteria for widow pension and disability pension will get revised from 40-64 years to 40-59 years and from 18-64 years to 18-59 years, respectively.
The decision is in line with the trend of giving more incentives in the pension sector. The government had announced concessions for the sector in the 2011-12 Budget. These included treating an employer’s contribution to an employee’s new pension system (NPS) account as a deduction while computing the employer’s taxable income. The change is applicable from the next financial year onwards. Finance minister Pranab Mukherjee also excluded an employer’s contribution to a pension scheme from the employee’s R 1-lakh exemption limit allowed under Section 80CCE. The government wants to create a set of robust retirement benefit schemes as the strong economic growth translates into longer lives and an ageing population.
The move will benefit an additional 72.32 lakh people in the 60-64 age group and living below the poverty line (BPL). The total additional requirement to implement the decision will be R2,770 crore. The government had provided R591 crore for 2011-12 for old age and other pension schemes, including IGNOAPS. It is estimated that 26.49 lakh people above the age of 80 and living below the poverty line would become eligible to receive the enhanced assistance. At present, 169 lakh BPL persons above the age of 65 are receiving this central assistance under the scheme. ?The additional funds required will be R1,736 crore for providing old age pension at R200 per month per beneficiary in the age group of 60-64 and R953 crore for providing enhanced pension at R500 per month per beneficiary of age 80 years and above,? said an official statement. Therefore, the total additional requirement will be R2,770 crore, including 3% administrative expenses.