• Retirement is a goal for people with substantial savings and a retirement fund to fulfill the financial requirements of their later years. For those who are financially stable, planning for retirement can be rather straightforward, but it can be challenging for individuals in the unorganized sector. This is where affordable pension plans like the NPS Swavalamban Scheme, also referred to as the NPS Lite Scheme, can have a significant impact.

• Today, we will provide you with more information about the scheme, including its definition, features, advantages, and all essential details regarding the Swavalamban Yojana Scheme.

What is Swavalamban Scheme?

The Swavalamban Scheme was introduced by the Government of India to aid senior citizens in the unorganized sector in achieving financial independence and enjoying a worry-free retirement. It is one among many pension schemes launched by the Government as an alternative to the National Pension System (NPS) that offers financial support to retired individuals from marginalized communities. This variant of the National Pension Scheme is overseen by the Pension Fund Regulatory and Development Authority (PFRDA), similar to other NPS forms.

Features and Benefits of the Swavalamban Scheme
Below are the features and benefits of the Swavalamban Scheme:

1. Investment:
   Eligible individuals can invest a minimum of INR 100 to open a Swavalamban account in the pension scheme. Additionally, the scheme requires a minimum yearly investment of INR 1000 and a maximum of INR 12000 to enjoy the benefits of NPS Lite. A government contribution of INR 1000 is made.
2. Can Be Set up with a Bank Account:
   While it is not mandatory for a Swavalamban Scheme subscriber to establish a bank account with the scheme, this option is available. Setting up a bank account with the Swavalamban Scheme is advantageous if quick and easy withdrawals are desired.
3. Market Linked Returns:
   The Swavalamban Pension Yojana invests in market-linked assets. Therefore, the returns will completely rely on the contributions made and the investment growth based on the assets’ performance. These assets include equity investments, making it one of the top retirement plans that can provide high returns over time.
4. Investment Diversification:
   As previously stated, the NPS Swavalamban Scheme invests in market-related instruments. These instruments consist of equity, government securities, and corporate bonds within India. Of these investments, 15% is allocated to equity, while 55% and 40% are directed towards government securities and corporate bonds, respectively. This allows the investor to diversify their portfolio to achieve high returns while minimizing risk.
5. Tax Benefits:
   The Swavalamban Scheme provides tax advantages to investors. Subscribers do not have to pay tax on the amount withdrawn from the scheme. The tax benefits are applicable in accordance with Section 80CCD of the Income Tax Act of 1961.

Related Topic: NPS Tax Benefits

6. Transparency:
   Investing in a legitimate and authentic investment cum savings scheme is crucial for ensuring investment safety. The Swavalamban Scheme is overseen by the PFRDA (Pension Fund Regulation and Development Authority of India). This regulatory body is tasked with supervising the scheme. This oversight may encompass upholding transparent investment standards and facilitating assessments of fund managers’ performance.

Eligibility Criteria
An individual must satisfy the following eligibility requirements to engage in the scheme:

• Individuals aged between 18 and 60 years can take part in the pension scheme.
• They should also be compliant with Know Your Customer (KYC) norms to commence investing in the scheme.
• They need to be citizens of India. NRIs cannot participate in the scheme.
• The individual should not be enrolled in any other social security scheme such as the Employees’ Provident Fund, the Coal Mines Provident Fund, the Miscellaneous Provision Act, etc.

• Withdrawal/ Exit Rules
• Generally, an individual can withdraw or exit from the scheme at the age of 60 under the Swavalamban Scheme. However, early exits are also allowed under certain conditions.
• Below are the withdrawal and exit rules of the Swavalamban Scheme for on-time, premature withdrawals, and death benefits:

1. On-time Withdrawals:
   Subscribers wishing to withdraw from the scheme at 60 must allocate 40% of accumulated savings (pension wealth) into an annuity. This annuity will be utilized to provide a monthly pension of Rs. 1000/ to the subscriber. If 40% of the corpus is inadequate to offer this pension amount, a larger percentage or the entire pension corpus would be required to purchase an annuity plan.
2. Exit Before 60:
   If the subscriber desires to exit prematurely, they will be required to invest a minimum of 80% of accumulated savings (pension wealth) to acquire an annuity plan. The subscriber may withdraw the remaining percentage.
3. Withdrawal on Death:
   The scheme provides a death benefit. This stipulates that in the event of the subscriber’s untimely death, the nominee will receive the corpus value. In this scenario, the nominee can withdraw the full corpus by contacting the aggregator.

Also Read: NPS Withdrawal Rules

• Conclusion
• The Swavalamban Scheme is a pension plan supported by the government specifically aimed at senior citizens within the unorganized sector. The scheme invests in market-linked instruments to provide high returns. You might consider investing in the scheme if it matches your financial objectives.