21% ditch PM pension plan in 6 mths

Pradhan Mantri Shram Yogi Maan-dhan (PMSYM), the flagship pension scheme launched by the government targeting unorganised sector workers, seems to be in trouble with as many as 21% subscribers quitting it in less than six months, The Economic Times has reported. The government data reveal that as a result of this veritable exodus, the total number of subscribers dropped from 5.62 million – an all-time high – on January 31, 2023 to 4.43 million on July 11, triggering waves of concern about the viability of the scheme.

The scheme, one of those designed to highlight the face of a welfare state, was launched in February 2019 for poor workers who earn their bread from the vast unorganised sector of the country.

Those between 18 and 40 years, who are earning less than Rs 15,000 a month, can enrol for the scheme.
When the scheme was launched there were about 42 crore workers working for the unorganised sector in India. The scheme envisaged a monthly pension of Rs 3,000 for each beneficiary during their old age.

The mass dropout signals a rising cost of living squeezing out the ability of the poor members to pay monthly contributions to the scheme. Therefore, people are opting out of the programme designed to secure their future, experts pointed out.

“Stubbornly high prices have raised the actual cost of living, making it difficult for these workers to sustain the burden of monthly contribution under the scheme. It would not be surprising if these are permanent exits, with workers actually withdrawing their contribution along with the interest earned on it as high prices continue to pinch on their pockets,” said K R Shyam Sundar, a labour economist.

The scheme stipulates that if a subscriber walks out within 10 years of joining it, he/she is free to do so and withdraw both his contribution and a savings bank interest rate on the amount.

However, if the exit takes place 10 years or more after he/she joins the scheme but before he/she turns 60, his/her share of contribution and the accumulated quantum of interest which is actually earned by the fund or that could have been earned by the prevailing savings bank interest rate, whichever is higher, would be credited to the subscriber.

However, with the scheme itself only four and a few months old, the second option does not apply for any subscriber.