Swavalamban Pension Yojana

Introduction

The government of India has launched various pension schemes over time to support senior citizens of the unorganized sector to become financially independent and secure. The Swavalamban scheme was one such endeavor on behalf of the government. Scour through the lines to understand more about the pension scheme, including its features, benefits, and more. 

What is Swavalamban Pension Yojana?

The Swavalamban pension plan was a micro-pension plan launched in the year 2010 with government backing. The scheme was monitored by the Pension Fund Regulation and Development Authority and aimed to promote the habit of retirement savings. The features of the pension scheme enabled the development of a strong retirement corpus along with making investors financially independent and self-reliant after retirement. 
The Swavalamban pension yojana revolved around a minimum investment amount of Rs 1000 per annum. The maximum investment amount for the scheme was Rs 12,000. For five years, the Indian government offered a sum of Rs 1000 per annum to all active accounts under the Swavalamban scheme. 
The withdrawal or exit from the Swavalamban scheme had certain terms and conditions. If the exit or withdrawal is executed after attaining 60 years of age, a minimum annuitization of 40% of pension wealth would be performed. If the exit age was anytime before 60 years, a minimum annuitization of 80% of pension wealth would be performed. 

However, the exit was possible only under the condition that the amount of the annuitized wealth was enough to provide a monthly amount of Rs 1000 at least. If the annuitized wealth did not yield an amount of Rs 1000 every month, the annuitization percentage would be increased. It was done to make the pension amount Rs 1000 every month. 

If it did not happen, the entire pension wealth would be subjected to annuitization. The minimum pension ceiling was revised at frequent intervals by the government. The withdrawal plan was according to the Tier-I account of NPS. 

The scheme marked a landmark achievement in terms of the most number of applicants for a pension scheme on its day of inception. By 2014, more than 35 lakh individuals subscribed to the pension scheme and benefited from it. However, further enrollment under the scheme was halted in 2015.
If you research the current Swavalamban pension yojana status, you will find out that it has been replaced by a more retirement-friendly scheme. The new scheme is titled the Atal Pension Yojana. All subscribers in the unorganized sector are allowed to contribute to the Atal Pension Yojana. Individuals below the income tax threshold who are not beneficiaries under any other social security scheme can also enjoy co-contribution from the government. 
 

Features of the Swavalamban Scheme

The features of the Swavalamban yojana are as follows:

●    Reliability on banks: The Swavalamban pension scheme was not reliable on a bank account. But since the investment was routed through bank accounts, individuals with a bank account were at an advantage.

●    Investment amount: Under the pension scheme, the minimum investment limit was only Rs 100. Furthermore, individuals under the Swavalamban plan did not have to make any annual contribution to their bank accounts. But depositing an amount between Rs 1000 and Rs 2000 enables individuals to attract a Rs 1000 contribution from the government every annum.

●    Government funding: The scheme was funded by the grants received by the Indian government.

●    Returns: Since the Swavalamban yojana was market-linked, the returns from it weren't fixed. 

●    Tax benefits: All investors in the Swavalamban scheme were allowed to enjoy tax benefits. The withdrawal amount was completely exempted from tax. 

●    Target beneficiaries: The benefits of the Swavalamban scheme were particularly aimed at the economically weak sections of the country. For instance, self-employed people, farmers, and labor-class individuals were the primary targets under the scheme.  

●    Investment diversification: Around 15% of the total amount was meant to be invested in the equity market. Another 55% of it was invested in government securities. The remaining 40% was invested in corporate bonds. This feature of the scheme turned out to be extremely beneficial for all Swavalambana account holders. 

●    Transaction statement: The Swavalamban pension yojana statement, including annual transactions, was available to all investors as a hard copy. It served as a vital tool for offering a fair idea about the investment corpus. 

●    Investment pattern: Individuals under the Swavalamban pension yojana were allowed to deposit as low as Rs 100 monthly. Moreover, investors are allowed to contribute as many times as they want to in a year. 

●    Nominee facility: Another attractive feature of the Swavalamban scheme was the ability to appoint a nominee. A nominee could either claim the accumulated money or continue the scheme according to the terms.  
 

Eligibility

●    All Indian citizens between 18 years and 60 years were eligible for the Swavalamban pension scheme. 

●    Beneficiaries of a PPF scheme like the Employees' Provident Fund and any other statutory pension were not eligible.

●    Individuals working under the state government, central government, and autonomous bodies were not eligible. 
 

Benefits of the Swavalamban Pension Scheme

The benefits of the Swavalamban pension yojana are as follows:

●    Low investment amount: The pension scheme does not require you to make any fixed monthly contribution, and there wasn't any predetermined investment frequency. Therefore, individuals were allowed to make contributions to the Swavalambana scheme according to their convenience. Moreover, account holders were able to generate income from an investment as low as Rs 1000 every month. Due to the minimal contribution requirement, it was a favorable investment plan for individuals with a limited income. 

●    Diversified risk factor: The pension scheme was closely monitored by the PFRDA. Therefore, the Swavalamban pension yojana guaranteed transparency of dealings and strictly followed norms associated with investments. The extended assured returns from the scheme offered a substantial income scheme. This aspect of the pension made it one of the most appealing retirement-oriented investment options. 

●    Tax benefits: The pension scheme also offered tax benefits to investors as the tax was exempted from the maturity amount. Investors often used a Swavalamban pension yojana calculator to understand more about its tax benefits.  
 

Application Process for Swavalamban Pension Yojana

Several people wondered how to apply for the Swavalamban pension yojana. Take a glance at the steps: 

●    All applicants had to fill up the NPS-Swavalamban application form. Individuals could opt for Swavalamban pension yojana online registration. as well as do it in offline mode.
●    After the Swavalamban pension yojana login, individuals had to add several KYC documents necessary for identity and residence proof. 
●    During registration, individuals had to make a Swavalamban pension yojana online payment or offline deposit of at least Rs 100. 

If any individual faced any issue with the registration process, they could contact the aggregators via SMS or a toll-free number. The aggregators offered all the necessary details related to the Swavalambana yojana scheme. 
 

Suitability of Applicants for the Swavalamban Scheme

If we speak in broad terms, the ideal beneficiaries of the Swavalamban yojana were individuals belonging to the unorganized strata of the country. But investors had to fulfill certain criteria to gain a source of income from the pension scheme. The key requirements were as follows:

●    Age between 18 to 60 years
●    Not employed by the state or central government
●    Not employed by any autonomous body
●    Not employed under any public sector undertaking of the state or central government
●    Not covered under a social security scheme under certain laws

As a new and improved scheme replaced the Swavalamban plan, the age limit was changed to 18 to 40 years. Other than that, the features of the Atal Pension Yojana are similar to its former counterpart. All existing account holders under the Swavalamban policy were allowed to switch to the better investment corpus targeted toward retired individuals and could retain their benefits backed by the environment. 
Check out the details of the Atal Pension Yojana in detail to make an informed choice about investing in the scheme.