How To Provide Old Age Income Security To Your Domestic Workers?

Life can be miserable in absence of a job or any other sources of income during retirement. It can be more troublesome for those working in unorganized sector such as your maid, watchman, gardener etc. These workers do not have any formal provision of getting a regular pension payment on retirement.

So, what are the options available for them once they reach such a stage in life………..

They can work till they die even if their physical condition doesn’t allow for the same (how cruel would be those people taking work from such domestic workers)………….. We know most of them are hand to mouth earners.  Without worrying anything about their future, they do contribute in smooth functioning of our society (it is difficult to imagine a day without a domestic help in India).

Thus in return, we can change their lives by our small contribution. A small contribution can give them assured income guarantee in their old age. Let’s read how one can do that:

To address the longevity risks among the workers in unorganized sector and to encourage the workers voluntarily save for their retirement, the government of India has launched a new scheme called “Atal Pension Yojana (APY)” in June 2015.

Under the APY, the subscribers would receive the fixed pension of    Rs. 1000 per month, Rs. 2000 per month, Rs. 3000 per month, Rs. 4000 per month, Rs. 5000 per month, at the age of 60 years, depending on their contributions, which itself would vary on the age of joining the APY. The minimum age of joining APY is 18 years and maximum age is 40 years. Therefore, minimum period of contribution by the subscriber under APY would be 20 years or more. The benefit of fixed pension would be guaranteed by the Government. The Central Government would also co-contribute 50% of the subscriber’s contribution or Rs. 1000 per annum, whichever is lower, to each eligible subscriber account, for a period of 5 years, who join the NPS before 31st December, 2015 and who are not income tax payers.

For a 18 year old worker, a contribution of Rs. Rs. 210 per month will get him Rs. 5,000 pension per month starting 60 years of age. In case of death of the subscriber, pension amount will be given to the spouse, and on the death of both (subscriber & spouse), the accumulated pension corpus would be returned to the subscriber’s nominee.

Thus, a small contribution can provide an income security to your domestic workers during their old age.

Help those who help you!!!!

This blog is written by students of Post Graduate Diploma in Financial Planning (PGDFP), International College of Financial Planning (ICFP)

(Pankaj Kumar, Parveen Tiwari and Shalini Tyagi)

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