This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in
Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)
Pradhan Mantri Suraksha Bima Yojana (PMSBY)
88% of India’s total labour force of 47.29 crore belongs to the unorganised sector, in which the workers do not have any formal provision of getting a regular pension payment on retirement. Moreover, due to increasing labour wages and better medical facilities, these people also face a risk of increasing longevity. So, this work force would require some kind of assured income guarantee to sustain itself in the coming years.
Launching Atal Pension Yojana (APY) from June 1, 2015
To encourage workers in the unorganised sector to voluntarily save for their retirement, the government of India will be launching a new scheme, called Atal Pension Yojana (APY), from 1st June, 2015. Finance Minister Arun Jaitley announced this scheme in his budget speech on February 28th.
This scheme will replace the UPA government’s Swavalamban Yojana – NPS Lite and will be administered by the Pension Fund Regulatory and Development Authority (PFRDA). The benefits of this scheme in terms of fixed pension will be guaranteed by the government and the government will also make contribution to these accounts on behalf of its subscribers.
Under this scheme, a subscriber would receive a minimum fixed pension of Rs. 1,000 per month and in multiples of Rs. 1,000 per month thereafter, up to a maximum of Rs. 5,000 per month, depending on the subscriber’s contribution, which itself would vary on the age of joining this scheme.
The minimum age of joining this scheme is 18 years and maximum age is 40 years. Pension payment will start at the age of 60 years. Therefore, minimum period of contribution by the subscriber under APY would be 20 years or more.
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, i.e., from 2015-16 to 2019-20, who join the NPS before 31st December, 2015 and who are not income tax payers. The existing subscribers of Swavalamban Scheme would be automatically migrated to APY, unless they opt out.
Who is eligible for Atal Pension Yojana?
Any Citizen of India, aged between 18 years and 40 years, who has his/her savings bank account opened and also possesses a mobile number, would be eligible to subscribe to this scheme.
Government Funding – Indian Government would provide (i) fixed pension guarantee for the subscribers; (ii) would co-contribute 50% of the subscriber contribution or Rs. 1,000 per annum, whichever is lower, to eligible subscribers; and (iii) would also reimburse the promotional and development activities including incentive to the contribution collection agencies to encourage people to join the APY.
Who is eligible for Government Co-Contribution in Atal Pension Yojana?
Subscribers of this scheme, who are not covered under any other statutory social security scheme and are not income tax payers, would be eligible for the government’s co-contribution of up to Rs. 1,000 per annum.
Social Security Schemes which are not eligible for Government Co-Contribution
- Employees’ Provident Fund (EPF) & Miscellaneous Provision Act, 1952
- The Coal Mines Provident Fund and Miscellaneous Provision Act, 1948
- Assam Tea PlantationProvident Fund and Miscellaneous Provision, 1955
- Seamens’ Provident Fund Act, 1966
- Jammu Kashmir Employees’ Provident Fund & Miscellaneous Provision Act, 1961
- Any other statutory social security scheme
Minimum/Maximum Pension Payable – This scheme will pay a minimum pension of Rs. 1,000 per month and a maximum pension of Rs. 5,000 per month, depending on the subscriber’s own contribution per month.
Minimum/Maximum Period of Contribution – As the minimum age of joining APY is 18 years and maximum age is 40 years, minimum period of contribution by the subscriber under this scheme would be 20 years and maximum period of contribution would be 42 years.
Atal Pension Yojana – Contribution Period, Contribution Levels, Fixed Monthly Pension and Return of Corpus to the Nominees of Subscribers
Internal Rate of Return (IRR) – Thanks to the government funding of Rs. 1,000 per annum per subscriber account for 5 years, your account would generate an IRR of approximately 0.66% per month or 8% per annum. This pension amount per month is fixed and the government has made it clear that if the actual returns on the pension contributions are higher than the assumed returns, such excess return will be credited to the subscribers’ accounts, resulting in enhanced pension payment to the subscribers.
Minimum Contribution – A subscriber aged 18 years will have to contribute a minimum of Rs. 42 per month in order to get Rs. 1,000 pension per month starting 60 years of age. For a 40 years old subscriber, his/her minimum contribution would be Rs. 291 per month. The contribution levels would vary and would be low if subscriber joins early and increase if he joins late.
Maximum Contribution – A subscriber aged 40 years will have to contribute Rs. 1,454 per month in order to get Rs. 5,000 pension per month starting 60 years of age. For a 18 years old subscriber, his/her contribution for Rs. 5,000 monthly pension would be Rs. 210 per month.
Can I increase or decrease my monthly contribution for higher or lower pension amount?
The subscribers can opt to decrease or increase pension amount during the course of accumulation phase, as per the available monthly pension amounts. However, the switching option shall be provided only once in a year during the month of April.
What will happen if sufficient amount is not maintained in the savings bank account for contribution on the due date?
Non-maintenance of required balance in the savings bank account for contribution on the specified date will be considered as default. Banks are required to collect additional amount for delayed payments, such amount will vary from minimum Re. 1 to Rs. 10 per month as shown below:
(i) Re. 1 per month for contribution upto Rs. 100 per month
(ii) Rs. 2 per month for contribution upto Rs. 101 to 500 per month
(iii) Rs. 5 per month for contribution between Rs. 501 to 1,000 per month
(iv) Rs. 10 per month for contribution beyond Rs. 1,001 per month.
Discontinuation of payments of contribution amount shall lead to following:
After 6 months account will be frozen.
After 12 months account will be deactivated.
After 24 months account will be closed.
Subscriber should ensure that the Bank account to be funded enough for auto debit of contribution amount. The fixed amount of interest/penalty will remain as part of the pension corpus of the subscriber.
Post-Retirement Rate of Return – Considering a retirement corpus of Rs. 1.7 lakh and monthly pension of Rs. 1,000, this scheme is going to generate a return of 0.59% per month or 7.1% per annum for its subscribers. I think this return is also on a lower side.
Nomination Facility – This scheme will also provide the nomination facility to its subscribers. In case of the subscriber’s death after attaining 60 years of age, the whole corpus generating the pension income to the subscriber would be returned back to the nominee of the subscriber. In case of untimely death of the subscriber before 60 years of age, the balance would be returned back to the nominee of the subscriber.
Where to open APY Accounts – You need to approach points of presence (PoPs) and aggregators under existing Swavalamban Scheme. These agencies would enrol you through architecture of National Pension System (NPS).
Points of Presence & Aggregators
Application Form – Here you have the links to the application form for subscribing to Atal Pension Yojana – Application Form in English – Application Form in Hindi
I think a subscriber should opt for a minimum monthly contribution of around Rs. 167 or so, which would make it approximately Rs. 2,000 annual contribution. 50% of Rs. 2,000 i.e. Rs. 1,000 would be contributed by the government as well. So, the subscriber will get the maximum benefit of government funding.
As mentioned above, the scheme would start from June 1, 2015. So, interested people will have to wait till then to open an account. If you have any other query regarding this scheme, please share it here.
Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)
Hello sir I am a state government employee and I am also a tax payer and also a member of EPF. So am I eligible for Atal Pension Yojna? Another thing I want to know, what is corpus amount Rs 8.5 laks?
Hi Soumadip,
Every Indian citizen is eligible for this scheme, but you, being a tax payer and covered under EPF, are not eligible for the government contribution of up to Rs. 1,000 per annum. Corpus of Rs. 8.50 lakh is the amount which will get accumulated when you turn 60. Your nominee will get this amount of Rs. 8.50 lakh in your absence.
Hi Shiv, there is lack of clarity on the following in APY:
1. Accrued balance of Swavalamban account is neither transferred automatically nor adjusted to the monthly premium of APY. I enquired about the same with PFRDA and aggregator and both have no answer for that.
2. There is no clarity on how government contribution of Rs.1000 is credited to APY i.e., whether the amount will be adjusted by reducing subscriber’s contribution of any one month in a year. For this also there is no answer from both PFRDA and Aggregator.
3. Applicable monthly premium payable by subscriber is determined based on completed years of age. Eg. a person aged 35 years and one month joining APY for 5000 pension will pay monthly premium of Rs.902 and another person aged 35 years 11 month will also pay same premium amount of Rs.902 for the same pension (i.e., second person is benefitted/saved by not paying premium of 11 months). Hence it would be advisable to all subscribers to join APY scheme just few days before their date of birth to save atleast 11 months premium.
Thanks a lot Mr. Ramprasad for these important points! I think there is still a lot clarity required in this scheme. I wonder why people are chasing this scheme.
If point 3 of my message is considered, we can strongly say that APY is not scientifically deviced properly and all subscribers should take advantage of this loop hole while enrolling for APY.
sir. me 42 rupees per month ke hisab se 42 saal ka premum ek saath bhar sakta hu
sir,actually my state govt as providing 1000 per month.if i will apply this pension,state pension also available or canceled??????
Your state government pension will be available, but you’ll not get the government contribution for APY.
sir…
me 42 rupees ke hisab se 42 saal ka payement ek saath kar sakta hu ?
Nahin Jitendra, ek saath lump sum investment nahin kar sakte.
Hi, Apart from PoPs aren’t the Banks also involved in promoting the scheme and taking care of the formalities like application forms, etc. alike PMJJBY & PMSBY schemes? Thanks!
Hi Ketan,
Banks are also included in the list of POP – SP.
Thanks! Shiv.
I tried enquiring in couple of Banks where I hold SB account (including Nationalised Bank) but I didn’t get positive response…giving me an impression that they weren’t much interested in promoting the scheme. I will again give it a try.
sir agar meri umra 23 saal he pure 60 saal hone tak agar premium bharta hu ho kitni maturity value milegi
Hi Devesh,
Aapko pension milegi, upar diye gaye table ke according. Aapke nominee ko aapke baad corpus amount milega.
I am working in a company and my PF amount is getting deducted. My age is 39 and I want to subscribe for Rs 5000 pension plan by contributing Rupees 1454 per month. Being a tax payer and PF is also getting from my salary, how much pension per month I will receive upon completion of 60 years of age.(Since I will not get the government contribution, I want to ask this question)
Hi Swati,
The government has not disclosed the pension amount in the absence of its contribution of up to Rs. 1,000 per annum.
DEAR SIR
I, SALILMITRA (DOB 05/04/1968) WORKING IN A PVT. FRIM WITH EPF ACCOUNT, WHERE MY WIFE IS THE NOMINEE.
MY WIFE (DOB 05/11/1975) HAS 02 S/B A/C WITH ME( SHE IS 2ND HOLDER) IN GOVT. BANK (SBI AND IDBI)
NOW CAN I OPEN ATAL PENSION YOJANA IN MY WIFE’S NAME IN ANY ONE JOINT S/B A/C ?.
CAN SHE MAKE A NEW ACCOUNT FOR OPEN ATAL PENSION YOJANA?
CAN I APPLY IN MY NAME IN HER NOMINEE?
PLEASE SEND A REPLY
SALIL MITRA
Hi Mr. Salil,
Every citizen of India is eligible for APY. So, your wife is eligible for this scheme. You need to have a Savings Bank A/c. in your wife’s name for her to subscribe to APY.
Dear sir,mera question hai ki yadi mai 5 or 10 year tak plan chalane ke baad
kise karan se plan nahi complite kar paata to mera jama rupaya milega yaa naheen.
Hi Mr. Rajesh,
Pension ke liye aapko is account ko active rakhna hoga.
and i have only CPS ( contributory pension scheme) i am appointed in Feb 2014 only. am i eligible for this APY scheme?
hi i am working in corporation of chennai (Government). am i eligible for this scheme?????? please reply as soon as possible
Hi Shankar,
Every citizen of India is eligible for this scheme. However, if you are a tax payer and covered under any other social security scheme, then you are not eligible for the government contribution.
Thank u for ur reply. I am not a tax payer. can i receive government contribution? and i want explanation of government contribution
If you are not covered under any social security scheme, then you’ll get the government contribution. Government contribution is explained in the post above.
Sir,
I am working in a company and my PF amount is getting deducted. My age is 27 and I want to subscribe for Rs 5000 pension plan by contributing Rupees 446 per month. Being a tax payer and PF is also getting from my salary, how much pension per month I will receive upon completion of 60 years of age.(Since I will not get the government contribution, I want to ask this question)
Hi Ilangovan,
The government has not disclosed the pension amount in the absence of its contribution of up to Rs. 1,000 per annum.
I want to know online process for join ing APY from my sbi account .thank .
Hi Pritam,
You need to check with your bank whether they are providing online facility or not.
Hai sir,this is shyamala,iam house wife,can i enroll for this apy scheme?
Hi Shyamala,
Every citizen of India is eligible for this scheme.
What happen if i joined this scheme on age of 18 and die around on my 40 or 50 so what happen with my money what happen wid dis scheme
Hi Shiprana,
Your nominee will get the balance amount in the account.
Sir, if husband(working)and wife(housewife) both take this plan and if any of one will get dead, can other one will getting 2 pensions.
Yes, the surviving partner will get both the pensions.
Hi Sir
I am Anup,i am from Kolkata,i am working in a private sector.my EPF deduction every month,if i join APY scheme,then will i get pf benifit double,after leaving the job.
EPF is a different scheme and APY is a different scheme. You’ll get benefits under both the schemes, but, as you are already covered under EPF, you won’t get the government contribution under APY.
Sir This is Anup from Kolkata,
I have a little confusion regarding APY secheme,Sir currently i am working in a private sector,i have a pf account in at my company,but i know i am eligible for Apy scheme,but i dont understood the goverment contrubution.plz explaing me,
Hi Anup,
Modi government has started this scheme for the workers in the unorganised sector and has committed to contribute up to Rs. 1,000 per annum for 5 years to those account whose subscribers are not tax payers and are not covered under any other social security scheme like EPF etc.
sir…..
Abhi mai 23 yrs old hu…..iam eligible to join apy scheme but later i do job and comes in tax slab…..so will my apy scheme continue for me
and also after joining apy.scheme……can i also hv later my ppf account and can i enroll for other pension schemes later..??
Hi Birendra,
As you become a tax payer or get employment with EPF etc., you’ll stop getting the government contribution of upto Rs. 1,000 per annum.
Hello sir,
I am self employed & already tax payer & i have ppf account also. If i want an amount of rs 5000 as a pension ,Can i opt this scheme.
Yes Akanksha, you can opt for this scheme, but won’t get the government contribution of up to Rs. 1,000 per annum.