Social security scheme from Jan 23

The government will launch the pilot project on social security for unorganised sector workers in 50 districts on January 23.

The project aims to cover 10,00,000 workers in the first year and an additional 15,00,000 in the next.

The project, launched after the Cabinet recently cleared the Unorganised Sector Workers Bill, entails the provision of pension and medical insurance to unorganised sector workers.

Twenty-five state capitals will be among the areas covered under the pilot project, which will also include towns like Faridabad, Nellore, Hazaribagh, Pune, Nagpur and Barh.

Under the terms of the scheme, workers will be given a flat rate registered pension of Rs 500 each month on retirement or permanent and total disablement.

In case of death, the pension will go to the widow or the orphans of the worker with a provision of enhanced or reduced pension based on the contributions.

Personal accident insurance of Rs 1 lakh (Rs 100,000) to cover death or total disability for the worker and purchase of the Universal Health Insurance Scheme for a worker and his family are also provided for in the scheme.

The scheme is to be financed by contributions from employees, employers and the government.

While the employee will be required to put in Rs 50, the employer will put in Rs 100 and the government will put in around Rs 21

per worker. The Centre's contribution is 1.16 per cent of the national floor wage, which is currently fixed at Rs 1,800 per month per worker.

Workers drawing more than Rs 6,500 per month at the entry point are not eligible, neither are workers in the age group of 36 to 50 years, after the first five years.

The latter category of workers can join within the first five years if they have an identifiable employer and are willing to pay a higher contribution of Rs 100.

The employers' contribution will remain at Rs 100 in such cases.

Workers will cease to be members of the social security scheme when they attain the age of 60 years or from the date of vesting admissible benefits under the scheme, whichever is earlier.

The scheme will be voluntary for workers below 35 years with no identifiable employer and for the self-employed. These categories will, however, also have to pay the employers' contribution.

In case of registered and unregistered establishments where business or economic activity is carried out, it will be mandatory for workers to join the scheme.

The social security scheme is to be managed by the Employees Provident Fund Organisation, which will also allot a National Social Security Number to each worker covered.