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.
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.
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.
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.
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.
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
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.
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:
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.