Hike in Subsidy for Overseas Pension Plan

17th April, 2014: The subsidy for overseas pension plan which is launched in October of last year has been increased by the Indian government. 6 lakh blue-collar Indian workers stand to benefit the MGPSY (Mahatma Gandhi Pravasi Suraksha Yojana) which is an overseas pension and insurance scheme launched in October of last year by the Government of India.

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The subsidy to the co-contributory pension scheme has been increased by the Indian government. This scheme is launched for overseas Indian workers and Rs 1,000 will be contributed by the government per annum to male subscribers who save between Rs 1,000 and Rs 12,000 per year.

The male subscribers would receive an amount double the amount which government would contribute. The women subscribers to this scheme who were already given an additional Rs 1,000 contribution from the ministry, would also receive the Pension Fund Regulation and Development Authority (PFRDA) subsidy.

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Workers with an Emigration Clearance Required (ECR) stamp on their passports can join the scheme. The contribution has been complemented with another Rs 1,000 which comes from the Ministry of Overseas Indian Affairs. This is from the PFRDA by including MGPSY under PFRDA's Swavalamban Yojana pension scheme. Apart from this, a contribution of Rs 900 has been announced by the ministry towards return and resettlement of the workers who save Rs 4,000 or more per annum.

The government contribution stands at Rs 3,900 for female subscribers and Rs 2,900 for male subscribers after the latest update. The scheme also offers free a life insurance cover while working overseas. The first to benefit from the scheme will be the early subscribers in the UAE.

The official announcement about the increase in the subsidy at the end of February is yet to be made due to procedural delays and the Model Code of Conduct for the upcoming general elections in India though the service providers in the UAE had been notified about this.

According to officials, the decision to increase the subsidy was taken much before the code became effective.

Encouraging and enabling overseas Indian workers is the goal of the scheme by providing co-contribution to save their return and resettlement in India, complimentary life insurance cover during the overseas employment period and save for their pension. Hardly a few hundred workers have signed up so far though the scheme was launched in the UAE.

By creating more awareness about the scheme, the Indian diplomatic missions and service providers have been trying to promote it. So far, the awareness programmes have focused on labour accommodations and the Indian Workers' Resource Centre.

This increase in subsidy will attract more subscribers according to the Senior Manager of marketing & retailing at Bank of Baroda, Sanjay Joshi. 

Among eight authorised service providers, all are not active in the UAE hampering widespread accessibility of the service to workers. One of the service providers, Alankit Assignments Limited, has tied up with the UAE Exchange to tackle this challenge.

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Subscribers can walk in to any of our 133 branches across the UAE and apply for the pension scheme. The COO of Global Operations, UAE Exchange, Y. Sudhir Kumar Shetty, said that their staff will also be involved now in awareness programmes. They will convince the workers in a better way about the benefits of the scheme while sending money home. As a part of the campaign, they will spread the word in labour accomodations.

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^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
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^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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