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)
Sir, My age is 40 yrs so EMI will b around 1454 for 5000 pm pension. If I want to pay double amount can i get double pension, thank you
No Anshuman, it is not allowed to increase the contribution amount to get a higher pension.
I am a govt PSU employee in bsnl age about 24 years, am I eligible to get the Atal pensions Yojna?
Hi Arka,
Every Indian citizen is eligible to open this account. However, being a government employee, you’ll not get the government contribution as you are already covered under a social security scheme.
Sir,i want to join in APY & I have aadhar card.But my wife still have no aadhar card.is it mandetory to have aadhar for both?
It is not mandatory to have the Aadhaar Card for opening this account.
I have one doubt, suppose if I discontinue or unable pay premium amount after some year then what is the rules for this how much will get
If you stop contributing to this account after a few years, then it will become inactive and will get closed subsequently. However, it is still not clear how & when you’ll be able to withdraw the amount.
Dear Sir,
Iam 38 years old, working in a private organisation member of EPF & tax payer. Can i take this policy for Rs.4000/- pension p/m.
Also my wife working & member of EPF and filing returns, is she also eligible for the scheme her age is 35years.
Dear Sir, APY enrollment form me ek line aise likhi hui hai,
“Further, I do not hold any pre-existing account under NPS.”
Is line se to yahi samajh aa raha hai ki NPS vaale jinke paas PRAN hai, ve is yojna ko nahi le sakte. Sir, Kya aisa hai?
This line is a declaration that you are not opening a second pension account and also related to the government contribution of Rs. 1,000 per annum. Agar aapka already NPS mein account hai, to aapko government contribution nahin milega.
Sir agar hum 10 years chala kar dead hojata ha to kitna amount milaga as my wife age is 39 nominee ko kitna milaga
person joined Atal Pension Yojna, he will contribute till age of 60 years
eg…..
If he wants monthly pension of Rs 1000 he would contribute Rs 181 a month. On his death his wife would get Rs 1000 per month and after her death the nominees will get 1.7 lakh.We understood….
But Clear the death period for taking benifits of Corpus.
eg, Period Between Year of Contribution / After Contribution / Both period
Hi Shrishti,
Corpus will be payable only on or after 60 years of age and only to the nominee of the subscriber.
Balance amount with unterest mtlb
Maturity milegi 1.7 ki ya fr 40 yrs tk jo invest kita hoga wo milega with interest..???
40 years tak jo invest kiya hoga wo milega with interest. Corpus amount of Rs. 1.70 lakh 60 years complete hone ke baad milega.
Or after 40 to 60
Or after 60 agr kuj hota hai to????
1. Between 40 to 60 years as well, aapke partner ko balance amount with interest milega.
2. After 60 years, aapke partner ko pension milegi and after your partner, aapke nominee ko corpus amount milega.
Sir,i & my wife has a joint sb a/c at united bank where my wife is the second holder can I open ‘APY’ in my wife’s name showing this a/c?
No Kousik, your wife has to be the primary account holder for this scheme.
Sir, I am a state govt. employee amd I am NPS (NEW PENSION SCHEME) subscriber having PRAN. Am I eligible for Atal Pension Yojna?
Who will be my nominee, my wife or my children as my wife will get pension after my death.:
Are both of us i.e. me and my wife eligible for APY?
Will nominee be same for both of us?
I am income tax payer and will not get govt contribution i.e. rupees 1000 per year for five years. In this case what will my monthly pension which would be rs. 5000 for non tax payers.
Hi Mr. Narender,
Every citizen of India, aged between 18 and 40 years, is eligible for APY. But, as you mentioned, you are not eligible for the government contribution. Your children will be your nominees. The government has not disclosed the pension amount for those who do not get the government contribution.
Mera que hai k agr mai abi scheme m invest krti hu
Or in a 40 yrs mje kuj ho gya then after me mere partner ko majurity claim hogi ya fr pension….?
Agar aapko 40 years mein kuch ho jaata hai to aapke partner ko balance amount with interest milega.
sir
mai public sector company (psu) mai kam karta hu meri wife house wife hai. kya mai unko APY account open karva sakta hu.
jab ki mera epf jama hota hi. aur mere sabhi saving a/c mai vo nomnee hai.
mai unke APY account mai nomnee ho sakta hu.
Hi Vinod,
Agar aapki wife 40 years ya usse kam hain, to unka account khul sakta hai. Aap unke nominee ban sakte hain.
Hello sir
I am Pankaj Singh already I have tax payer and I have ppf account. Can I join atal pension yojana
Regards
Yes, you can join APY, but you won’t get the government contribution.
Should people having EPF subscribe to this scheme ?
Will the pension be taxable ?
Pension will be taxable on maturity. I think it is not a great investment scheme, rest it depends on an individual whether he/she wants to subscribe to this scheme or not.
Sir, My DOB is 3rd June 1975. I’m already 40 year old Tax payer, am I eligible for ATP scheme? If so I would like to opt for Rs 5000 pension. As per scheme I need to pay Rs 1454 monthly and not eligible for Government Co-Contribution. Could you please clarify my following assumptions are correct?
• At the end of 60 years I’ll get 8.5L as lump sum.
• In addition I’ll also get INR 5000 as pension per month till death.
Hi Mr. Jayakanthan,
Firstly, as you have just turned 40, you are eligible for this scheme. Moreover, at the end of 60 years, you’ll get just the pension amount every month. The corpus of Rs. 8.50 lakh will be given to your nominee in your absence.
If i dnt want to get pension may i can get whole amount in once like 8.50 laks after maturity .Or a wife can be a contributor?
No Mr. Harsh, you are entitled to pension only, till you are alive. After you, your nominee will get the corpus of Rs. 8.50 lakh. This account will be linked to your savings bank account in which you are the primary holder. So, you’ll have to fund this scheme.
Sir I am a state Govt. Employee.I am facilitied on cpf scheme. Can I eligible to APY scheme.
Hi Mr. Panda,
Though you are eligible to subscribe to APY, you’ll not get the government contribution of Rs. 1,000 per annum.
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.
I think, with a scheme of more than 20 years at least, it would hardly make any big difference if I subscribe to this scheme at the age of 33 years 1 month or 33 years 11 months. I would be able to save a maximum of Rs. 15,994 (Rs. 1454 * 11 months). But, if your info is correct, there is a gap in this scheme’s design.
Hello sir am 28yrs old. 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 lakhs?
In case of 5000 pension amount. And what amount my nominee will get if I died after 3yrs of making dis policy…. plz tell inrespect of 5000 amount..
If you die after 3 years, your nominee will get your deposited amount with interest earned on it, i.e. Rs. 485 * 12 months * 3 years = Rs. 17,460 + interest earned on it.