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Swavalamban Pension Yojana: Features & Benefits 2021

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May 10, 2023

5 Minutes

Swavalamban Pension Yojana: A Comprehensive Micro-Pension Solution

Launched in 2010 under the oversight of the Pension Fund Regulation and Development Authority (PFRDA), the Swavalamban Pension Yojana aimed to revolutionize retirement savings in India's unorganized sector. While the scheme is no longer active, understanding its features and benefits provides insights into the dynamics of micro-pension plans.

Key Features and Benefits of Swavalamban Pension Yojana:

1. Investment Parameters:

Minimum investment: Rs. 1000 per annum.

Maximum investment: Rs. 12,000 per annum.

Government contribution: Rs. 1000 per annum for 5 years.

2. Investment Diversification:

Allocation:

15% to equity shares.

55% to government securities.

40% to corporate bonds.

3. Statement of Transactions:

Account holders received an annual hard copy statement.

Facilitated tracking contributions and monitoring corpus growth.

4. Nominee Facility:

Option to claim accumulated amount as a lump sum.

Flexibility to continue as per norms.

5. Targeted Beneficiaries:

Aimed at economically weaker sections: farmers, self-employed individuals, and labor class.

6. Funding and Tax Benefits:

Funding from grants received by the Government of India.

Investors are entitled to tax benefits.

Returns are not fixed, influenced by market forces.

Discontinuation and Transition:

Despite its impactful features, the Swavalamban Pension Yojana was discontinued in 2016 and succeeded by the Atal Pension Yojana. Existing account holders were permitted to transition to the new scheme while preserving their accumulated contributions.

Conclusion and Future Considerations:

In conclusion, the Swavalamban Pension Yojana served as a secure retirement avenue for the unorganized sector. Its unique features, including a modest investment threshold, tax benefits, and diverse investment options, made it appealing. While the scheme is no longer active, individuals exploring pension solutions can delve into alternatives like the Atal Pension Yojana. Understanding the evolution of micro-pension plans is crucial for making informed decisions in the dynamic landscape of retirement savings.