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 [email protected]
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)
Does this has income tax rebate?
Do you have any calculator for calculating with my age?
Yes, the premium will be eligible for a rebate under section 80C. Please check this link, it has contribution table as per different ages – http://www.jansuraksha.gov.in/files/apy/ENGLISH/FAQ.pdf
untill which age they will provide this monthly pension, upto 80yrs? 90 yrs? if the person was died, does nominee will get the pension? if so upto at age?
Pension will be paid till the pensioner is alive and after him, the corpus amount will be paid back to his/her nominee. No pension will be paid to the nominee.
and after my wife in which account the pension amount will be credited because we both have separate account in different banks
Only your wife will be entitled to her pension.
hi i am 29 year old and i am eligible to get pension from EMPLOYEES’ PROVIDENT FUND ORGANISATION. after 60 year can we join APY and get benefit plz confirm.
Hi Zoha,
You can subscribe to APY, but your account will not get the government contribution.
my wife is 36 and I have opted for 5000 pension on her name now my query is if something happens to my wife after 5 years then can I get 5000 pension without paying 990 every month and after me her nominee will get 8.50 lacs because I have also applied for 5000 pension so in this case weather I am eligible to get total pension of 10000
No, if something happens to your wife, you being the nominee are not entitled to any pension. You’ll get your wife’s principal investment back along with the interest earned on it.
and can I give my mobile number in my wife’s pension form
Yes, you can do so.
Hello Shiv,
After 60th year, both are alive (Main holder and spouse), in this case each get pension amount or main holder only. Please clarify.
Hi Balaji,
Only the subscriber will get the pension amount and not the nominee.
me and my wife have a joint account where she is first holder and second I so can I give this saving account details in both forms
I have no idea about this Nitesh. You need to check it with the bank.
I am a central employe under new pension scheme (CPF) and tax payer so I am eligible for atal pension yojna
Yes, you are eligible for this scheme, but you are not eligible for the government contribution.
can we opt for a same nomiee for me and for my wife so that he can get total of 17 lacs after us
Yes, that is possible.
Sir,one should invest in this apy or not ???
It is a personal choice Reshma. To me, it is not a great scheme.
Hi kukreja sir
1.Is this scheme started or not because when I asked in sbi bank they said scheme will start from 1st june. Is it right sir?
2. And when subscriber died during contribution period so corpus amount will get to nominee and if subscriber died after 60 year so can nominee will get corpus amount with pension or only pension or only corpus amount.
Hi Atul,
1. Yes, this scheme will start from June 1, 2015.
2. Nominee will get only the corpus amount and no pension will be paid to him/her.
and weather any minor saving account details is required and the total amount of 8.50 lacs will be direct credited in their bank account and weather any certificate we will get after joining this scheme
Nominee’s bank details will not be required immediately, it might be required whenever some unfortunate event occurs. A statement of account will be issued to the subscriber for his/her contribution.
my wife is 36 and she have a mis of 4.50 lacs in post office and ppf account and a demat account is she eligible for government contribution of 50 % and what amount I have to pay monthly 990 for a pension of 5000 or 50 % less @ 495
Hi Nitesh,
You’ll have to check it with any of the aggregators regarding your wife’s eligibility. Your wife’s contribution will depend as per the pension amount you people seek at the age of 60 years. The government will contribute either 50% of your annual contribution or Rs. 1,000 per annum, whichever is lower.
thanks shiv my wife is 36 and she have a mis of 4.50 lacs in post office and ppf account and a demat account is she eligible for government contribution of 50% and what amount I have to pay monthly 990 for a pension of 5000 or 50% less @ 495
My date of birth 17. 08. 1956
Can I join this scheme?
No Mr. Thomas, you are not eligible for this scheme.
Sir,
My Wife DOB: 18.01.1975, Whether she is eligible to enroll/ join in Atal Pension Yojana (APY) launching from June 1, 2015. Please give your reply to my email-id. Thanking You.
Hi,
As per the terms of the policy, any citizen of India, aged between 18 and 40 years of age, is eligible to subscribe to this scheme. As your wife is 40 years old, she is eligible for this scheme.
its very confusing shiv my birth date is 5 – 5 – 1975 so am I eligible for this scheme or not some bank staff are saying yes & some are saying no so please clear my doubt
As per the terms of the policy, you are eligible for this scheme as you are still 40. Not sure how they are taking cases like yours.
In APY scheme , after the death of the subscriber after suppose 70 years whether the nominee is eligible for pension along with corpus amount . And after the death of nominee what will happen…..
Hi Avijit,
After the demise of the subscriber, the nominee will get back the corpus amount. No pension will be paid to the nominee.
Hi,
Thank you prime minister for helping the poor people with such a scheme. However the only drawback with this plan is the age limit is only till 40. This should be extended till 45-50. I want to take this plan for my mother however since her age is above 40 i am unable to subscribe. Would be great if you consider people below age group 50 in this plan.