In January 2011, Samhita Microfinance was authorized to act as an Aggregator by the PFRDA for its NPS-Lite Pension scheme. After training field staff on the product, processes and systems, Samhita successfully launched micro pension services for its community members in February 2011.
The Pension Fund Regulatory and Development Authority (PFRDA) was created by the Government of India in 2003, to promote old age income security and regulate the pension sector in India. In 2009, the PFRDA developed the National Pension Scheme-Lite (NPS-Lite). The goal of the scheme was to encourage the economically weaker sections of society to contribute small savings during their productive years, and avail of retirement income as part of a defined contribution pension scheme. NPS-Lite also includes the benefits of the government sponsored Swavalamban Scheme, through which the GOI grants an incentive of Rs. 1,000 to low-income members contributing between Rs. 1,000 and Rs. 12,000 in a given year.
Subscribers may redeem the invested funds at the age of 60 years. They may either choose to receive payments on the entire investment in the form of a monthly annuity for the rest of their life, or redeem 60% as a lump-sum and leave 40% invested on which they receive a cash stream as a monthly annuity. The PFRDA also intends to allow deposits into pension accounts at any of a number of public financial institutions such as the Post Office.
PFRDA changed pension guidelines and policies in 2015. Below are notes from the process followed by Samhita before the changed policy.
Samhita's Financial Literacy trainings emphasize the value of savings for old age. Members interested in subscribing for the pension service are required to submit identification and address proof as part of 'Know-Your-Customer' requirements, along with other information required by the NPS-Lite application. Samhita forwards all application details to the Central Recordkeeping Agency (CRA) of the National Securities Depository Agency (NSDL) on a weekly basis. Within 3 weeks of submission, the CRA assigns a Permanent Retirement Account Number (PRAN) to the subscriber, and within an additional 2 weeks, makes available a Pension card (the PRAN Card) for the member. Samhita encourages members to contribute regularly on a monthly basis. All pension contributions are transmitted electronically to the CRA on a weekly basis.
Samhita has developed elaborate management processes to track performance within the overall process. The Portfolio Streams software automates the pension processes within Samhita, integrating pensions data with our regular microfinance databases.
Offering pension services remains a major challenge for Samhita, since elaborate systems are to be maintained with minimal cost recovery, members have to be reminded and motivated for consecutive contributions, and various procedural delays exist across different intermediaries in the process. However, the value of the service for community members is significant and Samhita is dedicated to provision of this service.
The new process applicable since 2015 is described below.
Effective 1st April 2015, in order to streamline the coverage of the pension scheme, PFRDA decided that no new accounts under this scheme Swavlamban will be opened. Instead, a new Bank account linked and Banks operated scheme, Atal Pension Yojna, will take its place covering subscribers in the 18 to 40 years age range, which was earlier available up to 60 years maximum under Swavlamaban.
Hence, according to PFRDA directives, no new accounts under Swavlamban have been opened by Samhita therafter. However, existing subscribers are being allowed to continue depositing their consecutive installments as usual without getting the benefit of incentive amount.
As on September 2021, Samhita has 24,351 NPS-Lite pension subscribers.