All NRIs can now invest in pension scheme

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All NRIs can now invest in pension scheme

Dubai - Those between 18 and 60 years will be eligible depending on investment.

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Published: Fri 24 Jul 2015, 12:00 AM

Last updated: Fri 24 Jul 2015, 8:57 PM

Indian expatriates in the UAE have warmly welcomed their government's "historic" decision to allow Non-Resident Indians (NRIs) to invest in their home country's National Pension System (NPS).
According to reports in the Indian media, over 11 million NRIs in around 192 countries are set to benefit from the move announced by the Pension Fund Regulatory and Development Authority (PFRDA).
The authority's chairman, Hemant Contractor, on Wednesday announced that all NRIs can now invest in NPS to get social security cover post retirement following relaxation of rules by the Reserve Bank of India.
The government will shortly come out with a clarification on Foreign Exchange Management Act guidelines to facilitate this, he was quoted as saying in the Indian media.
Currently, only migrant Indian workers with Emigration Clearance Required (ECR) stamp in their passports are eligible for pension cover under the Mahatma Gandhi Pravasi Suraksha Yojana (MGPSY).
The relaxation in rules means all NRIs between 18 and 60 years will be eligible for a pension depending on the investment made.
According to the PFRDA, subscribers can choose their investment mix that is usually in equity, corporate bonds and/or government securities, as per his/her risk appetite. The benefit subscribers ultimately receive depends on the amount of contributions, the returns made on the contributions and the period of contributions. With a minimum annual contribution of Rs6,000, NRIs will also be eligible for income tax deduction for an investment of Rs50,000 in NPS.
"This is a historic decision for NRIs," said TR Remesh, president of Overseas Friends of Bharatiya Janata Party (OFBJP).
'Modi's Gift to NRIs'
"This is also Modi's biggest gift for NRIs, especially those in the UAE and other GCC countries where there is no social security coverage for expats," said Remesh who had headed an OFBJP delegation from the UAE who presented a memorandum seeking pension coverage for all Indian expats at the Pravasi Bharatiya Divas 2015.
"There should be another scheme (other than MGPSY) where all others can join and contribute their savings for a pension scheme. This will help a large number of commoners, especially women employees who have faced divorce which is on the rise here," he had said in January.
Remesh said the Minister of External Affairs, Sushma Swaraj, had assured that the government would seriously look into the matter. "I'm glad it has come through so fast. Many commoners will consider this more beneficial to them than the voting right."
K.V. Shamsudheen, chairman of Pravasi Bandhu Welfare Trust, said: "This is what we wanted for long.... In the current scenario (where NRIs have obtained voting right), NRIs need to be treated as residents in all aspects. I consider it as a precursor to such a great change."
Sanjay Joshi, head of Operations and Services Department at Bank of Baroda, which handles the MGPSY scheme, said the new pension scheme will be a great assurance for the retired life of expatriates when they go back home for good.
Aboobacker CH, who has helped many workers join the Kerala government's pension scheme, said the government should educate all low-paid workers about the system and make provisions for easy payment options for them to make it a success.

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