India tweaks pension plan to include expat workers in UAE

Top Stories

Picture used for illustrative purposes alone
Picture used for illustrative purposes alone

An existing pension scheme run by the country's pension regulator is now set to fill the void, officials said.

By Suneeti Ahuja-Kohli

  • Follow us on
  • google-news
  • whatsapp
  • telegram

Published: Fri 17 Feb 2017, 9:57 PM

Indian expat workers in the UAE can take heart. New Delhi has an inclusive pension plan for them after it decided to scrap an exclusive 'pilot' scheme. The old plan attracted fewer than 300 accounts, a dismal performance by any standards, hence the government gave up on it, sources told Khaleej Times. An existing pension scheme run by the country's pension regulator is now set to fill the void, officials said. The regulator is in touch with the Ministry of External Affairs for effectively promoting and implementing the scheme through its missions abroad.
Read on: India junks NRI pension scheme; what's next?
This 'new' scheme for workers has been in existence since 2015. Called the Atal Pension Yojana, it currently caters to workers in the unorganised sector in India, but is now open to low-income NRI workers. Many contours of the two pension policies are similar, including the contribution made by the government of India.
Managed by the pension fund regulator, it guarantees monthly pension payments after 60 years of age. "This can serve as the right alternative for all workers engaged in the unorganised sector as well as low-income non-resident Indian workers," a senior official at the Pension Fund Regulatory and Development Authority (PFRDA) told Khaleej Times.
Important: Scrapped Indian pension scheme was not popular among workers
It is estimated that 65 per cent of the Indian population in the UAE is blue-collar workers. Most of them aren't financially literate to save for retirement and end up in a miserable state because of lack of any financial safety net.
India has been trying to promote and launch schemes that encourage people to save while they work. The Mahatma Gandhi Pravasi Suraksha Yojana for expat workers was a pilot attempt but  fell flat due to lack of enthusiasm and proper marketing. The scheme that was launched in 2012 combined the benefits of a life insurance and a contributory pension for Indian workers in 17 countries.
"The government is in the process of closing the Mahatma Gandhi Pravasi Suraksha Yojana while strengthening other measures including the insurance scheme Pravasi Bhartiya Bima Yojana for the welfare of overseas Indian workers. Being a voluntary scheme and for a variety of other reasons, the subscription under the Mahatma Gandhi scheme has been extremely low?," Vikas Swarup, Additional Secretary and official spokesperson, Ministry of External Affairs told Khaleej Times.
Contributions from existing Mahatma Gandhi scheme subscribers to the Atal scheme will not be affected. "Necessary arrangements will be in place to ensure migration of NPS lite pension subscribers between 18-40 years to Atal Pension Yojana and those above 40 years to PFRDA. Likewise, settlement of claims of return and resettlement, and insurance claims will be done respectively by UTI and LIC up to a cut off date," said Manish Gupta, Joint Secretary in the Overseas Indian Affairs department.
The Atal scheme is a pure pension policy without life insurance. The policy has drawn 4.4 million members since its launch in June 2015. It is linked to the individual's bank account and voluntary in nature, with provisions for monthly, quarterly and annual premium payments.
Subscribers would receive a fixed minimum pension of Rs 1,000 per month (Dh54.76), Rs 2,000 per month (Dh109.51), Rs 3,000 per month (Dh164.27), Rs 4000 per month (Dh219.03), Rs 5,000 per month (Dh273.79), at the age of 60 years, depending on their contributions. The minimum age of joining the scheme is 18 years and maximum age is 40 years.
The Government of India would also co-contribute 50 per cent of the total contribution, or Rs 1,000 per annum (Dh54.76), whichever is lower, to each eligible subscriber account, for a period of five years.
suneeti@khaleejtimes.com
 


More news from