The new scheme PMSYM is available to all unorganised sector workers up to 40 years of age and is envisaged to become the world’s biggest scheme for the unorganised sector in coming five years.
Pradhan Mantri Shram Yogi Maandhan (PMSYM), a new pension scheme announced by Finance Minister Piyush Goyal in Budget 2019, has raised concerns about the existence and continuity of the Atal Pension Yojana (APY), which was launched in 2015 targeting the same population.
The new scheme PMSYM is available to all unorganised sector workers up to 40 years of age and is envisaged to become the world’s biggest scheme for the unorganised sector in coming five years. It has been launched as a tribute to the 42 crore workers in the unorganised sector, who contribute to around half of the India’s GDP and constitute 85 per cent of the total workforce in the country.
The scheme provides an assured monthly pension of Rs 3,000 per month from the age of 60 years to workers in the unorganised sector at a contribution of only Rs 100 month per month during their working age. It is likely to benefit 10 crore workers and will be administered by the Labour Ministry.
Further, it has been proposed to run alongside the existing Atal Pension Yojana, which guarantees returns post-retirement. However, there are apprehensions that PMSYM might eat into the base of APY, as the new scheme has government as the co-contributor whereas Atal scheme requires full contribution is by the subscriber.
Insurance sector officials have expressed their discontent with the launch of the new scheme, The Indian Express reported citing unidentified officials. “The government could have made APY more attractive instead of launching one more similar scheme,” an official of a private pension fund told The Indian Express.
Hemant Contractor, Chairman, PFRDA, said that it is too early to comment on the government’s new scheme as the details are not known. “Prima facie, the new scheme will compete with APY. The attraction for the new scheme is that the government will be a co-contributor,” Hemant Contractor said to The Indian Express.
However, he doesn’t think that it will cannibalise the APY scheme, which is linked to the bank accounts opened under the Pradhan Mantri Jan Dhan Yojana scheme and the contribution is deducted automatically.
PFRDA has requested the government to increase the age limit under APY to 50 years from 40 years and add more slabs whereby monthly pension under the top slab will be Rs 10,000 per month, he added.