Four Retirement Planning Schemes For Self-Employed

Self-employed people require a different approach to retirement planning, compared to those with regular income in the organised sector. Recently, the government has focused on extending social security benefits to gig and platform workers, which also includes the self-employed. While insurance companies do offer pension plans to all, including those belonging to the unorganised sector, these typically have a mandatory insurance component. In addition to private options, there are also government-run contributory social security schemes for the self-employed. Incidentally, in many of these schemes, the government matches subscribers' contributions.

Here are the details of the four schemes.

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National Pension System (NPS):

NPS is one of the most flexible social security schemes available to Indian citizens. The scheme offers tax benefits and comes under different formats encompassing both the organised and the unorganised sectors. Although it doesn’t guarantee a fixed pension, the historical returns show a decent return of around 13 per cent annually. It is suitable for people who have regular income as well as those who have irregular income.

Withdrawals are also allowed in lump sum, capped at 60 per cent of the retirement corpus accumulated upon maturity. It can also be withdrawn at certain frequencies instead of a lump sum. The account can be opened with a minimum of Rs 500, but the minimum annual contribution is Rs 1,000. Any Indian citizen between the ages of 18 and 70 can open the account. As of March 1, 2025, there are 16 million NPS subscribers.

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National Pension Scheme

The National Pension Scheme is specifically meant for self-employed people and traders. It was launched in 2019. It is a voluntary and contributory pension scheme for retail traders, shopkeepers, and self-employed people. The entry age is between the ages of 18 and 40, similar to APY.

The monthly contribution ranges from Rs 55 to Rs 200, and it offers a guaranteed pension of Rs 3,000 per month after the subscriber turns 60. Anyone who is not an income-tax payer and has a turnover of less than Rs 1.5 crore can subscribe to this scheme. Also, the subscriber should not be a member of the Employees’ Provident Fund Organisation (EPFO), NPS- government model, Employees’ State Insurance Corporation scheme (ESIC), and Pradhan Mantri Shram Yogi Maandhan Yojana (PM-SYM).

There are nearly 60,000 subscribers to this scheme, as of March 3, 2025, according to the Ministry of Labour and Employment.

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PM-Shram Yogi Maandhan Yojana (PM-SYM)

Launched in 2019, this is also a government-led contributory scheme for unorganised sector workers. Anyone whose monthly income is up to Rs 15,000, and is aged between 18 and 40 years of age, can subscribe to this scheme. The government contributes an equal amount as the subscriber and promises a guaranteed pension of Rs 3,000 per month.

As of March 3, 2025, there are 4.61 million (4,612,047) subscribers to this scheme.

Atal Pension Yojana (APY)

As of February 1, 2025, there were 62.28 million subscribers. The scheme is aimed to provide social security in the form of a guaranteed pension. It was started in May 2015.

Initially, the government also contributed to the scheme along with the subscribers, but later stopped it. Anyone between the age of 18 and 40 years, who is not a taxpayer can contribute to this scheme to receive a guaranteed pension after turning 60.

The scheme guarantees a minimum pension of Rs 1,000 and a maximum of Rs 5,000. The contribution amount depends on the age and pension amount a subscriber chooses. This fixes the pension amount when a subscriber joins the scheme.