SWAVALAMBAN SCHEME: A CRITIQUE

Anganwadi workers and helpers who have been working for 30 – 35 years are now being ‘retired’ on reaching the age of 58 - 60 years without any compensation. The workers have been demanding gratuity and pension equivalent to half of the last drawn wages. The then Women and Child Development minister, Renuka Chowdhury and the Prime Minister assured that the government would pay some ‘parting gift’.

Now, the government of India is promoting ‘Swavalamban’, a scheme to be administered by the PFRDA (Pension Fund Regulatory and Development Authority) as a pentionary benefit for the anganwadi employees. Some state governments like Karnataka are forcing the anganwadi employees to join the scheme

What is ‘Swavalamban?’ Is it beneficial to the anganwadi employees? Does it guarantee regular monthly pension?

As already mentioned, it is a scheme administered by PFRDA.

As per the scheme

* Each subscriber will have individual Retirement Account

* Each subscriber gets an identity card with photograph and signature known as PRAN (Permanent Retirement Account Number) card which establishes his/ her membership

* Each subscriber has to contribute Rs 1000 – Rs 12000 per year; these will be collected by agencies approved by the PFRDA, like government agencies or NGOs etc in flexible instalments or monthly or quarterly basis

* The government of India will contribute Rs 1000 per year for only 5 years (this has been increased to 5 years in the latest budget from 3 years earlier). The subscriber has to make contributions every year up to the age of 60 years

* The contributions of the subscribers will be invested in financial instruments; the returns will be used to build the pension corpus of the subscribers

* The subscriber has to choose a fund manager

* He/she may choose one from the following – SBI, UTI, ICICI, Reliance, Kotak and IDFC

Or

* He/ she may choose 3 fund managers viz – SBI, UTI and LIC; in this case, the fund will be divided among these in a ratio to be fixed by the PFRDA

Once in a year the statement of account – details of transactions, the market value of the corpus etc will be sent to the subscriber; Rs 70 will be deducted every year from the account for record keeping

* At the age of 60, the subscriber can withdraw 60% of the accrued corpus in a lump sum; 40% will be annuitised (invested in shares) and the return on this amount will be given as monthly pension. if the subscriber wants to exit before 60 years, he/ she can withdraw only 20% of the total amount accrued as lump sum; 80% has to be annuitised (In the latest budget, exit norms have been relaxed allowing a subscriber to exit at 50 or a minimum tenure of 20 years whichever is later, but the terms and conditions for such relaxation have not been specified)

* The annuitised amount has to yield a minimum of Rs 1000 monthly pension; if the amount of pension corpus is not enough to get a minimum monthly pension of Rs 1000, then the pension corpus would be increased, if necessary using the entire corpus amount; no lump sum amount will be available in such a situation

* In case of death of the subscriber, the entire money in the account can be withdrawn by the immediate heir of the subscriber without any amount being annuitised

* In case of any grievance, the subscriber has to approach the ‘aggregator’, i.e. the agency which has been approved by the PFRDA to collect the money or send his/ her written complaint to the PFRDA or CRA (Central Recordkeeping Agency).

Problems

* The government of India, under whose programme the anganwadi workers and helpers work all their lives contributes only Rs 5000 towards their old age security; the state governments who implement the ICDS, do not contribute anything under ‘Swavalamban’ scheme

* Almost the entire amount for pension has to be contributed by the anganwadi employees but they will not have any control over their money; if they deposit it in a bank they will be free to withdraw it whenever they want; but as per ‘Swavalamban’, the PFRDA will decide what to do with that money; the fund managers will decide how to invest the money of the anganwadi employees

* If the money is invested in a bank, at least one will know the rate of interest; in the case of ‘Swavalamban’ there is no guarantee on how much returns one would get on the money invested in share markets

* Even as per the example given by the PFRDA, contribution of Rs 100 per month for 30 years will yield Rs 1, 49,035 if the rate of return is 8%. Even if this entire amount is invested with 8% return, the amount of monthly pension will be only Rs 993, i.e. less than Rs 1000. They will not get any lump sum amount in such a case. Besides, it is not clear whether they would be asked to contribute more if they cannot get a monthly pension of Rs. 1000.

* If any anganwadi employee has any grievance or complaint related to her ‘Retirement Accounts’, she cannot approach the government of India or the state government, for whom she works. They are not accountable to her. How is it possible for an anganwadi employee working in some remote village to approach the PFRDA and the ‘Aggregators’?

Conclusion

* The ‘Swavalamban’ scheme does not guarantee a fixed monthly pension to the anganwadi employees; it all depends upon the share markets; if the share markets collapse the anganwadi employees will lose savings of their entire life

* It is nothing but an attempt by the government to draw the poor anganwadi employees along with the workers in the unorganised sector into the share market so that huge amounts of money actually belonging to the anganwadi employees and other poorer sections will be available to the big corporates, the real players in the share markets

* It is part of the neo liberal policies of the government – to benefit the rich at the cost of the poor

* The government wants to evade its responsibility to provide gratuity and pension to the anganwadi employees who have all their lives worked in its ICDS programme being implemented by the Ministry of Women and Child Development

Demands of anganwadi workers and helpers:

* Anganwadi workers and helpers, who are the ‘backbone’ of the Integrated Child Development Services (ICDS), contributing to the development of the country’s children, its future, are entitled to social security benefits including gratuity and pension as their right

* Anganwadi workers and helpers should get pension as an ‘assured’ benefit; it cannot be something where the contributions of anganwadi workers and helpers are ‘assured’ but there is no guarantee for the returns

* The government must take full responsibility to provide social security benefits including gratuity and pension for all the anganwadi workers and helpers. u The government should immediately formulate a pension scheme for the anganwadi employees, discuss with all the national federations representing the anganwadi employees and finalise it taking their suggestions into consideration

* Gratuity and pension should be implemented retrospectively to all the anganwadi employees who have been ‘retired’

Courtesy: www.citucentre.org/