National Pension Scheme for Traders and Self-Employed Persons

The government introduced the National Pension Scheme for Traders and Self-Employed Persons (NPS-Traders) scheme to provide old age protection and social security for retail traders/shopkeepers and self-employed persons whose annual turnover does not exceed Rs.1.5 crore. 

The NPS-Traders scheme is a contributory and voluntary government pension scheme for Lahu Vyaparis, shopkeepers, retail traders and self-employed persons. They can join the NPS-Traders scheme after they attain 18 years but within 40 years. The amount of contribution to receive a pension varies as per the entry age to the scheme. 

The Ministry of Labour and Employment regulates this scheme. The Life Insurance Company (LIC) is the fund manager and is responsible for pension payouts. The LIC and Common Service Centres (CSCs) implement the NPS-Traders scheme.

Eligibility Criteria for NPS-Traders  

• The following retail traders, shopkeepers or self-employers persons are eligible:
  • Laghu Vyaparis 
  • Shop owners 
  • Rice mill owners
  • Oil mill owners
  • Workshop owners
  • Commission agents 
  • Brokers of real estate 
  • Owners of small hotels, restaurants
  • Such other Laghu Vyaparis. 
• The retail traders, shopkeepers or self-employed persons should be between 18-40 years
• The annual turnover should be below Rs.1.5 crore
• Retail traders, shopkeepers or self-employed persons should not be
  • Engaged in the organised sector or be a member of the Employees’ Provident Fund Organisation (EPFO), National Pension Scheme (NPS) or Employees’ State Insurance Corporation (ESIC)
  • A beneficiary of Pradhan Mantri Shram Yogi Maandhan (PM-SYM)
  • An income taxpayer
• Retail traders, shopkeepers or self-employed persons should have an Aadhaar card and savings bank account or Jan Dhan account with IFSC

Benefits of NPS-Traders

An individual will receive a minimum assured pension of Rs.3,000 every month after attaining 60 years. When the individual dies, the spouse will receive 50% of the pension as a family pension. However, family pension is applicable only to the spouse. 

Contribution by the retail traders/ shopkeepers and self-employed persons

The individual (beneficiary) should join the NPS-Traders scheme by 40 years and contribute monthly towards the pension scheme from the date of joining until they attain 60 years. The beneficiaries can contribute to the scheme through an auto-debit facility from their savings bank accounts or Jan Dhan accounts. 

The monthly contribution amount varies between Rs.55-200, depending on the age when the individual joins the scheme. The Central Government will contribute an equal amount towards the pension account. However, once the beneficiary joins the scheme, they must contribute until they are 60 years to receive a monthly pension.

Application Process for NPS-Traders

Eligible individuals should follow the below steps to join the NPS-Traders scheme:

Step 1: The eligible persons should visit the nearest CSC centre.

Step 2: They should provide their Aadhaar card, savings/Jan Dhan bank account details and IFSC code to the Village Level Entrepreneur (VLE).

Step 3: They should give the initial contribution amount in cash to the VLE. They can pay the other contribution amounts through the auto-debit facility. 

Step 4: The VLE will enter the Aadhaar number, subscriber’s (individual’s) name and date of birth as printed on the Aadhaar card for authentication into the system.

Step 5: The VLE will complete the online registration by filling in the other details, like bank account details, email address, mobile number, GSTIN, spouse, annual turnover income and nominee details.

Step 6: The system will auto-calculate the monthly contribution payable according to the subscriber’s age.

Step 7: An enrollment cum auto debit mandate form will be printed, and the subscribers should sign the form. The VLE will scan the form and upload it into the system.

Step 8: The system will generate a unique Vyapari Pension Account Number (VPAN), and the Vyapari card will be printed.

The labour offices of Central and State governments and LIC branch offices will act as facilitation centres to give information regarding the scheme to retail traders, shopkeepers and self-employed persons.

Withdrawal and Exit from NPS-Traders

The withdrawal provisions of the NPS-Traders scheme are as follows:

Exit from the scheme within ten years

When the beneficiary exits the scheme within ten years, only the beneficiary’s share of the contribution will be returned to him/her with a savings bank interest rate. 

Exit from the scheme after ten years

When the beneficiary exits the scheme after ten years or more but before 60 years, the beneficiary’s share of contribution and the accumulated interest or at the interest rate of savings bank, whichever is higher, will be given to the beneficiary.

Beneficiary dies before 60 years

When a beneficiary has contributed regularly but died due to any cause, his/her spouse can continue the scheme by paying the regular contribution amount. The spouse can also exit the scheme by receiving the beneficiary’s contribution and interest earned or at the interest rate of savings bank, whichever is higher.

Beneficiary becomes disabled before 60 years

When a beneficiary has contributed regularly and becomes permanently disabled before 60 years, and is unable to continue contributions, his/her spouse can continue the scheme by paying the regular contribution. The spouse can also exit the scheme by receiving the beneficiary’s contribution and interest earned or at the interest rate of savings bank, whichever is higher.

Beneficiary dies after 60 years

After the beneficiary’s death after 60 years, his/her spouse will receive a monthly family pension equal to 50 % of the beneficiary’s pension.