PFRDA suggests pension-insurance link to expand NPS coverage
09 September 2016
The Pension Fund Regulatory and Development Authority (PFRDA) has suggested linking pension with life insurance so as to bring the informal sector under pension coverage and expand the New Pension Scheme (NPS) network.
The suggestion comes as part of a concept note prepared by PFRDA wherein employers in the informal sector will need to automatically enroll workers under the Atal Pension Yojana (APY).
The employer, however, will not be bound to make any contribution for the workers. This will initially be voluntary and there will be no penalty for failure to get workers enrolled.
PFRDA has put up the concept note on its website for feedback from stakeholders.
''Pension is a long term engagement and keeping in view the income profile of the targeted group (for auto enrollment), it is proposed to use insurance and health coverage as an incentive for long term engagement. Insurance components like insurance coverage of health and life may be bundled with APY to take care of health and life contingencies of the members,'' the paper has said.
Under the auto enrolment scheme employers, organisations, departments employing or engaging any person whether formally or informally will be asked to automatically enroll them into Atal Pension Yojana.
The pension regulator has suggested that Rashtriya Swastha Bima Yojana (RSBY) can be extended to the members who will auto enroll under APY scheme for a monthly pension of Rs 1000 so that the health insurance benefit is restricted to the poorer section of society.
The RSBY, which was specially launched for the unorganised workers falling under BPL category, was later extended to include other categories of workers like building and other construction workers registered with the welfare boards, licensed railway porters, street vendors and MNREGA workers among others.
PFRDA initially plans to target Anganwadi workers, accredited social health activists, construction workers, those working in small-scale industries and non-governmental organizations where the government is a major employer.
The RSBY entitles beneficiaries to hospitalisation coverage of up to Rs30,000 per annum on family floater basis, for most of the diseases that require hospitalisation. The benefit will be available under the defined diseases in the package list. The government has framed indicative package rates for the hospitals for a large number of interventions.
Pre-existing conditions are covered from day one and there is no age limit. The coverage extends to maximum five members of the family, which includes the head of household, spouse and up to three dependents. The premium of Rs12 per annum is paid for the insurance from their saving account.