FEA­TURE

So­cial Se­cu­rity

Consumer Voice - - Contents -

Some re­cent schemes

Since In­de­pen­dence, In­dia has had many pro­grammes de­signed to pro­vide so­cial se­cu­rity to its peo­ple – by way of ad­dress­ing their needs for food, health, pen­sion, and even em­ploy­ment. The Pre­am­ble to the Con­sti­tu­tion lays down the frame­work of a gov­ern­ment that of­fers to its peo­ple the se­cu­rity that will en­able them to live a dig­ni­fied life. That said, mil­lions of poor, dis­pos­sessed peo­ple have re­mained ex­cluded from so­cial pro­tec­tion – for a mul­ti­tude of rea­sons in­clud­ing lack of doc­u­men­ta­tion, cir­cu­lar mi­gra­tion, im­per­ma­nent res­i­dence, and mis­match be­tween the re­quire­ments of var­i­ous schemes and the re­al­i­ties of the in­tended ben­e­fi­cia­ries. While go­ing into th­ese rea­sons is out­side the purview of this ar­ti­cle, it will be in­ter­est­ing to see what im­pact the new/up­dated lot of so­cial-se­cu­rity schemes will have, if any.

Ar­ti­cle 41 of Di­rec­tive Prin­ci­ples of the State Pol­icy asks the states, “within the lim­its of its eco­nomic ca­pac­ity and de­vel­op­ment,” to make “ef­fec­tive pro­vi­sion for se­cur­ing the right to work, to ed­u­ca­tion, and to pub­lic as­sis­tance in cases of un­em­ploy­ment, old age, sick­ness and dis­able­ment, and in other cases of un­de­served want.” Ar­ti­cle 42 of the Con­sti­tu­tion says that the state shall make pro­vi­sions for se­cur­ing just and hu­mane con­di­tions of work as also for ma­ter­nity ben­e­fits.

In their ef­fort to abide by the Pre­am­ble and to reach out to a large num­ber of peo­ple who fail to lead a dig­ni­fied life at the grass­roots, the gov­ern­ment at the cen­tre plans and in­tro­duces var­i­ous so­cial-se­cu­rity schemes. Most such schemes fo­cus at strength­en­ing the fi­nan­cial ca­pac­ity of house­holds by offering them cheaper loans and var­i­ous in­sur­ance as well as pen­sion schemes.

Jan Su­rak­sha – For the Com­mon Man

The Naren­dra Modi-led gov­ern­ment’s Jan Su­rak­sha ini­tia­tive has sup­pos­edly made in­sur­ance

af­ford­able even for poor house­holds in the re­mote ar­eas of the coun­try and prom­ises that pen­sion will reach the needy and marginalised lot. The three schemes – Prad­han Mantri Jee­van Jy­oti Bima Yo­jana (PMJJBY), a life-in­sur­ance pol­icy; Prad­han Mantri Su­rak­sha Bima Yo­jana (PMJSBM), an ac­ci­den­tal death and dis­abil­ity cover pol­icy; and Atal Pen­sion Yo­jana (APY) – are the three pil­lars of the so­cialse­cu­rity in­fra­struc­ture that the cur­rent gov­ern­ment claims to have put in place.

Prad­han Mantri Jee­van Jy­oti Bima Yo­jana: Life In­sur­ance

This is an in­sur­ance scheme with low pre­mium and a com­par­a­tively higher risk cover. The scheme, with a one-year cover, is re­new­able from year to year and is be­ing of­fered and ad­min­is­tered through Life In­sur­ance Cor­po­ra­tion and other life in­sur­ance com­pa­nies will­ing to of­fer the prod­uct on sim­i­lar terms with nec­es­sary ap­provals and tie-ups with banks. Par­tic­i­pat­ing banks can freely en­gage with any life in­sur­ance com­pany to im­ple­ment this scheme for their sub­scribers. Who can join? All hold­ers of sav­ings ac­count in the par­tic­i­pat­ing banks – in the age group of 18 years to 50 years – will be en­ti­tled to join. In case of mul­ti­ple sav­ings ac­counts held by an in­di­vid­ual in one bank or dif­fer­ent banks, the per­son will be el­i­gi­ble to join the scheme through one sav­ings ac­count only. Aad­haar card is the pri­mary KYC doc­u­ment.

Un­der the scheme, two lakh ru­pees is payable on a mem­ber’s death due to any rea­son, while the payable pre­mium is only Rs 330 per an­num per mem­ber. The pre­mium is de­ducted from the ac­coun­tholder’s sav­ings ac­count in one in­stal­ment through ‘auto debit’ fa­cil­ity. The rules of the schemes, how­ever, say that an­nual pre­mium will be re­viewed based on an­nual-claims ex­pe­ri­ence. Nev­er­the­less, bar­ring un­fore­seen ad­verse out­comes of an ex­treme na­ture, the scheme’s rules also say that ef­forts will be made to en­sure that there is no up­ward re­vi­sion of pre­mium in the first three years.

El­i­gi­bil­ity

Sav­ings ac­coun­thold­ers of the par­tic­i­pat­ing banks aged be­tween 18 years (com­pleted) and 50 years (age nearer birth­day) who give their con­sent to join and en­able auto-debit, as per the above modal­ity, can en­rol them­selves for the scheme. In­di­vid­u­als are re­quired to give a self-cer­ti­fi­ca­tion of good health and that he/she does not suf­fer from any of the crit­i­cal ill­nesses as men­tioned in the ap­pli­ca­ble con­sent-cumdec­la­ra­tion form as on date of en­rol­ment or ear­lier.

Mas­ter pol­i­cy­holder

Par­tic­i­pat­ing banks are the mas­ter pol­i­cy­hold­ers. A sim­ple claim-set­tle­ment process has been con­cep­tu­alised by LIC in con­sul­ta­tion with the par­tic­i­pat­ing banks.

Ter­mi­na­tion of as­sur­ance

The as­sur­ance on the life of the mem­ber will ter­mi­nate on any of the fol­low­ing events and no ben­e­fit will be­come payable there­un­der: a) On at­tain­ing age 55 years (age near birth­day) sub­ject to an­nual re­newal up to that date (en­try, how­ever, will not be pos­si­ble be­yond the age of 50 years) b) Clo­sure of ac­count with the bank or in­suf­fi­ciency

of bal­ance to keep the in­sur­ance in force c) In case a mem­ber is cov­ered un­der PMJJBY with LIC of In­dia/other com­pany through more than one ac­count and pre­mium is re­ceived by LIC/other com­pany in­ad­ver­tently, in­sur­ance cover will be re­stricted to Rs 2 lakh and the pre­mium will be li­able to be for­feited. d) If the in­sur­ance cover is ceased due to any tech­ni­cal rea­sons such as in­suf­fi­cient bal­ance on due date or due to any ad­min­is­tra­tive is­sues, the same can be re­in­stated on re­ceipt of full an­nual pre­mium and a sat­is­fac­tory state­ment of good health e) Par­tic­i­pat­ing banks will re­mit the pre­mium to in­sur­ance com­pa­nies in case of reg­u­lar en­rol­ment on or be­fore the 30th of June ev­ery year, and in other cases in the same month when re­ceived.

Prad­han Mantri Su­rak­sha Bima Yo­jana (PMSBY): Ac­ci­den­tal Death and Dis­abil­ity Cover

In light of the fact that a large pro­por­tion of the pop­u­la­tion have no accident in­sur­ance cover, the

Prad­han Mantri Su­rak­sha Bima Yo­jana is aimed at cov­er­ing the un­cov­ered pop­u­la­tion at a highly af­ford­able pre­mium of just Rs 12 per year. Avail­able to peo­ple in the age group of 18 to 70 years, they must have a sav­ings ac­count, give their con­sent to join, and en­able auto-debit on their per­sonal ac­counts.

El­i­gi­bil­ity

Sav­ings bank (SB) ac­coun­thold­ers be­tween 18 years (com­pleted) and 70 years (age nearer birth­day) who give their con­sent to join/en­able auto-debit, as per the modal­ity, will be en­rolled into the scheme.

Pay­ment mode

The pre­mium will be di­rectly auto-deb­ited by the bank from the sub­scriber’s ac­count. This is the only mode avail­able. To­tal cov­er­age (sum in­sured) un­der the scheme is Rs 2 lakh.

The cover is sub­ject to ex­clu­sions of the pol­icy.

Ex­clu­sions

In­ten­tional self-in­jury, sui­cide or at­tempted sui­cide whilst un­der the in­flu­ence of in­tox­i­ca­tion al­co­hol or drugs, or any loss aris­ing from an act made in breach of law with or with­out crim­i­nal in­tent

Con­di­tions/Re­stric­tions

Mantri Su­rak­sha Bima Yo­jana with any other sav­ings bank ac­count. In case the same is found to ex­ist, the pre­mium will stand for­feited and no claims will be paid. month, sub­se­quent to the date of en­rol­ment in the scheme. even if he/she joins the scheme af­ter the com­mence­ment of the group pol­icy. force as long as all pre­mium due are paid un­til at­tain­ing age of 70 years as on an­nual re­newal date. not pro­vided in SMS/avail­able in SB ac­count. No sep­a­rate in­ti­ma­tion will be pro­vided for the same. reg­is­tered mo­bile num­ber will be con­sid­ered as their con­sent for auto-debit from their sav­ings bank ac­count. is found to be un­true, the mem­ber­ship to the scheme will be treated as can­celled from the date of join­ing the scheme and pre­mium paid in re­spect thereof will stand for­feited.

Atal Pen­sion Yo­jana (APY): For Old-Age In­come Se­cu­rity

Atal Pen­sion Yo­jana pro­vides a de­fined pen­sion, de­pend­ing on the con­tri­bu­tion and its pe­riod. It fo­cuses on all cit­i­zens in the un­or­gan­ised sec­tor who join the Na­tional Pen­sion Sys­tem (NPS) ad­min­is­tered by the Pen­sion Fund Reg­u­la­tory and De­vel­op­ment Author­ity (PFRDA). Un­der APY, sub­scribers will re­ceive the fixed min­i­mum pen­sion of Rs 1,000 to Rs 5,000 per month at the age of 60 years, de­pend­ing on their con­tri­bu­tions, which it­self will be based on the age of join­ing APY. The min­i­mum age for join­ing APY is 18 years and the max­i­mum age is 40 years. There­fore, the min­i­mum pe­riod of con­tri­bu­tion by any sub­scriber un­der APY will be 20 years or more. The ben­e­fit of fixed min­i­mum pen­sion is guar­an­teed by the gov­ern­ment. El­i­gi­bil­ity APY is open to all bank ac­coun­thold­ers. The cen­tral gov­ern­ment also con­trib­utes 50 per cent of the

to­tal con­tri­bu­tion or Rs 1,000 per an­num, which­ever is lower, to each el­i­gi­ble sub­scriber ac­count. How­ever, the gov­ern­ment’s con­tri­bu­tion is avail­able only for the five-year pe­riod start­ing from fi­nan­cial year 2015– 16 to 2019–20, for those who join the NPS be­fore 31 De­cem­ber 2015, are not mem­bers of any statu­tory so­cial se­cu­rity scheme, and who are not in­come-tax pay­ers. The scheme will con­tinue af­ter this date, but the gov­ern­ment’s con­tri­bu­tion will not be avail­able.

En­rol­ment and pay­ment

All bank ac­coun­thold­ers un­der the el­i­gi­ble cat­e­gory may join APY with auto-debit fa­cil­ity to ac­counts, lead­ing to re­duc­tion in con­tri­bu­tion­col­lec­tion charges. Sub­scribers should keep the re­quired bal­ance in their sav­ings ac­counts on the stip­u­lated due dates to avoid any late-pay­ment penalty. Due dates for monthly-con­tri­bu­tion pay­ment is ar­rived at based on the de­posit of first con­tri­bu­tion amount. In case of re­peated de­faults for a spec­i­fied pe­riod, the ac­count is li­able for fore­clo­sure and gov­ern­ment co-con­tri­bu­tions, if any, will be for­feited. Also, in the event of any false dec­la­ra­tion about his/her el­i­gi­bil­ity for ben­e­fits un­der this scheme, for what­so­ever rea­son, the en­tire gov­ern­ment con­tri­bu­tion will be for­feited along with the pe­nal in­ter­est. For en­rol­ment, Aad­haar will be the pri­mary KYC doc­u­ment for iden­ti­fi­ca­tion of ben­e­fi­cia­ries, spouse and nom­i­nees to avoid pen­sion rights and en­ti­tle­ment-re­lated dis­putes in the long term.

Sub­scribers are re­quired to opt for a monthly pen­sion from Rs 1,000 to Rs 5,000, and en­sure pay­ment of the stip­u­lated monthly con­tri­bu­tion reg­u­larly. The sub­scribers can opt to de­crease or in­crease the pen­sion amount dur­ing the course of ac­cu­mu­la­tion phase, as per the avail­able monthly pen­sion amounts.

How­ever, the switch­ing op­tion will be pro­vided once in a year dur­ing the month of April. Each sub­scriber will be pro­vided with an ac­knowl­edge­ment slip af­ter join­ing APY which will in­vari­ably record the guar­an­teed pen­sion amount and the due date of con­tri­bu­tion pay­ment.

En­rol­ment agen­cies

All points of pres­ence (ser­vice providers) and ag­gre­ga­tors un­der Swavalam­ban Scheme will en­rol sub­scribers through the ar­chi­tec­ture of Na­tional Pen­sion Sys­tem. The banks, as POP or ag­gre­ga­tors, may em­ploy non-bank­ing ag­gre­ga­tors, mi­cro-in­sur­ance agents, and mu­tual fund agents as en­ablers for op­er­a­tional ac­tiv­i­ties. The banks may share the in­cen­tives re­ceived by them from gov­ern­ment, as deemed ap­pro­pri­ate.

Mi­gra­tion of ex­ist­ing sub­scribers of Swavalam­ban Scheme to APY

The ex­ist­ing Swavalam­ban sub­scriber, if el­i­gi­ble, may be au­to­mat­i­cally mi­grated to APY with an op­tion to opt out. How­ever, the ben­e­fit of gov­ern­ment con­tri­bu­tion un­der APY will not ex­ceed five years – thus, if as a Swavalam­ban ben­e­fi­ciary one has re­ceived the ben­e­fit of gov­ern­ment con­tri­bu­tion for one year, then the same un­der APY will be avail­able for only four years, and so on. Ex­ist­ing Swavalam­ban ben­e­fi­cia­ries opt­ing out of the pro­posed APY will be given gov­ern­ment con­tri­bu­tion till 2016–17, if el­i­gi­ble, and the NPS Swavalam­ban will con­tinue un­til such peo­ple at­tain the age of exit un­der this scheme.

The ex­ist­ing Swavalam­ban sub­scribers be­tween 18 and 40 years will be au­to­mat­i­cally mi­grated to APY. For seam­less mi­gra­tion to the new scheme, the as­so­ci­ated ag­gre­ga­tor will fa­cil­i­tate those sub­scribers for com­plet­ing the process of mi­gra­tion. Those sub­scribers may also ap­proach the near­est au­tho­rised bank branch for shift­ing their Swavalam­ban ac­count into APY.

The Swavalam­ban sub­scribers who are be­yond the age of 40 and do not wish to con­tinue may opt out of the Swavalam­ban scheme by com­plete with­drawal of en­tire amount in lump sum, or may pre­fer to con­tinue till 60 years to be el­i­gi­ble for an­nu­ities there­un­der.

Penalty for de­fault

Un­der APY, the in­di­vid­ual sub­scribers will have an op­tion to make the con­tri­bu­tion on a monthly ba­sis. Banks are re­quired to col­lect ad­di­tional amount for de­layed pay­ments; such amounts will vary from a min­i­mum Re 1 per month to Rs 10 per month as shown be­low:

month

Rs 500 per month

and 1,000 per month per month The fixed amount of in­ter­est/penalty will re­main as part of the pen­sion cor­pus of the sub­scriber.

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