National pension scheme for traders, self employed persons: Know its benefits, eligibility and how to enroll

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Updated: September 12, 2019 3:52:28 PM

The National Pension Scheme for Shopkeeper’s, Retail traders and Self Employed persons is a voluntary and contributory scheme, in which the government will also make a matching contribution.

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After Atal Pension Yojana, Pradhan Mantri Shram Yogi Man-Dhan Yojana (PM-SYM) and other schemes, Prime Minister Narendra Modi has launched another pension scheme for small traders and self employed persons, which will provide a monthly pension of Rs 3,000 to the beneficiaries from the age of 60 years onwards. The National Pension Scheme for Shopkeeper’s, Retail traders and Self Employed persons is a voluntary and contributory scheme, in which the government will also make a matching contribution.

Traders and self employed persons in the age group of 18-40 years are eligible to join the scheme with monthly contribution of Rs 55 to Rs 200 depending on age. Lower the age, lower will be the amount of monthly contribution and vice-versa.

However, self employed shop owners, retail owners and other vyaparis (traders) having annual turnover less than Rs 1.5 crore will only be able to join the scheme. Moreover, any person making contribution to EPFO, ESIC, NPS (government declared), PM-SYM and/or paying income tax are also not eligible for the scheme.

To enroll for the scheme, follow the procedure given below:

  1. Visit the nearest Common Service Centre (CSC) with your Aadhaar Card and savings/Jan-Dhan account passbook
  2. Your required contribution for the scheme will be calculated at the Centre based on your age
  3. Pay your first contribution at the Centre in cash
  4. Sign the nomination form and auto-debit mandate form
  5. The Pension Card will be issued instantly and further contributions will be debited from your savings/Jan-Dhan account automatically from the next month

The pension will be provided by the Life Insurance Corporation (LIC) of India, which currently has two annuity schemes – Jeevan Akshay and Jeevan Shanti. To get monthly pension of Rs 3,000 for life starting from the age of 60 years, the single premium needed under Jeevan Akshay is around Rs 4,18,000 (without GST). Assuming that the contribution will remain constant to get the monthly pension or Rs 3,000, the government need to generate around 13 per cent return on the combined contribution of Rs 400 (Rs 200 by the beneficiary and Rs 200 by the government) to accumulate Rs 4,18,000 for a beneficiary of 39 years 11 months old beneficiary in 20 years 1 month. Whereas, for a beneficiary, who joins just at the age of 18 years, the government need to generate just about 8 per cent return on the combined contribution of Rs 110 to accumulate Rs 4,18,000, which may be achieved by generating 10.38 per cent return even without making matching contribution by the government, i.e. just by investing Rs 55 per month.

So, it will be advantageous for government if more and more young traders and self employed persons join the scheme.

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