Atal Pension Yojana: A Silver Lining for the Unorganized Sector

Hi guys,

Two things have happened this month.

1. I have switched jobs
2. I have turned 25 years old

Both these things have got me thinking about planning for the future and I have started some basic research on investment plans, SIPs and pension schemes. After sifting through the myriad policies, fine print and investment options, I came across something. The GOI has something for for us millennials. You see, most of us work in the private sector and very few organizations tend to provide a pension scheme unless you are a long term employee with them. We millenials, tend to change jobs at the drop of a hat and therefore, by the time we turn 60, it is quite possible that we might be pension less.

That is why; today, I want to talk to you about the Atal Pension Yojana

The ambitious and evidently successful scheme of Government of India – Financial Inclusion has brought our whole country in its ambit. The scheme has effectively reached and benefited a large magnitude of the underprivileged Indian population; and continues to do so. The scheme aims at providing universal access to financial services across all households, thereby providing the benefits of the modern financial system, coupled with social security schemes. Three social security schemes have been launched simultaneously, to primarily benefit people from the unorganized sector – Pradhan Mantri Jeevan Jyoti Bima Yojana , Pradhan Mantri Suraksha Bima Yojana and Atal Pension Yojana. While the first two schemes provide life insurance and accidental insurance covers; the third scheme is aimed at providing income security in old age, through a fixed monthly pension. Through these social security schemes, the Government of India plans to provide Jan Dhan Se Jan Suraksha.

“As our young population ages, it is also going to be pension-less. Encouraged by the success of the Pradhan Mantri Jan Dhan Yojana, I propose to work towards creating a universal social security system for all Indians that will ensure that no Indian citizen will have to worry about illness, accidents or penury in old age”

-Finance Minister Arun Jaitley in his 2015-16 Union Budget speech

Atal Pension Yojana

The Government of India announced a new scheme in Union Budget 2015-16, that was designed to provide old age income security to the working poor, mostly in the unorganized sector; to encourage and enable them to save for their retirement. The scheme is administered by the Pension Fund Regulatory and Development Authority (PFRDA) through NPS architecture.

Benefits of Atal Pension Yojana

• Triple Benefits :-

(i)    Each subscriber under APY shall receive a Central Government guaranteed minimum pension of Rs. 1000 per month or Rs. 2000 per month or Rs. 3000 per month or Rs. 4000 per month or Rs. 5000 per month, after the age of 60 years until death.

(ii)   After the death of the subscriber, same pension amount shall be available to the spouse of the subscriber.

(iii)  After the death of both i.e. subscriber and spouse, the pension corpus, as accumulated till age 60 years of the subscriber, would be returned to the nominee of the subscriber.

• Government of India will also co-contribute 50% of the subscriber’s contribution or Rs. 1000 per annum, whichever is lower for 5 years, i.e. from the Financial Year 2015-16 to 2019-20 for the subscribers, who join the scheme till 31^st March, 2016 and who are not covered by any Statutory Social Security Scheme and are not income tax payers.

Eligibility

Indian citizens aged between 18-40 years, having an active Savings Bank Account or Post Office Savings Bank Account; is eligible for Atal Pension Yojana.

How to open an APY account

• Approach the bank branch/post office where individual’s savings bank account is held or open a savings account if the subscriber doesn’t have one.
• Provide the Bank A/c number/ Post office savings bank account number and with the help of the Bank staff, fill up the APY registration form.
• Provide Aadhaar / Mobile Number. This is not mandatory, but may be provided to facilitate the communication regarding contribution.
• Ensure keeping the required balance in the savings bank account/ post office savings bank account for transfer of monthly / quarterly / half yearly contribution.

Current Scenario

As on 1^st April, 2017, 48.89 lakh subscribers have been enrolled under APY with an accumulated pension wealth of Rs. 1751.31 crores.

More than 50% of the total APY subscribers are rural subscribers. Out of the total subscribers more than 18 lakh subscribers are female subscribers. About 25 lakh APY subscribers are under the age group of 26-35 years. This constitutes more than half of the total subscribers registered under APY.

With a large number of people subscribing to and benefitting from Atal Pension Yojana, the dream of a better and plnned life for every citizen, does not seem far-fetched.