The
Government of India is extremely concerned about the old age income security of
the working poor and is focused on encouraging and enabling them to join the
National Pension System (NPS). To address the longevity risks among the
workers in unorganised sector and to encourage the workers in unorganised
sector to voluntarily save for their retirement, who constitute 88% of the
total labour force of 47.29 crore as per the 66th Round of NSSO
Survey of 2011-12, but do not have any formal pension provision, the Government
had started the Swavalamban Scheme in 2010-11. However, coverage under
Swavalamban Scheme is inadequate mainly due to lack of clarity of pension
benefits at the age after 60.
The
Finance Minister has, therefore, announced a new initiative called Atal Pension
Yojana (APY) in his Budget Speech for 2015-16. The APY will be focussed on all
citizens in the unorganised sector, who join the National Pension System (NPS)
administered by the Pension Fund Regulatory and Development Authority (PFRDA)
and who are not members of any statutory social security scheme. Under the APY,
the subscribers would receive the fixed pension of Rs. 1000
per month, Rs. 2000 per month, Rs. 3000 per month, Rs. 4000 per month, Rs. 5000
per month, at the age of 60 years, depending on their contributions, which
itself would vary on the age of joining the APY. The minimum age of joining APY
is 18 years and maximum age is 40 years. Therefore, minimum period of
contribution by the subscriber under APY would be 20 years or more. The benefit
of fixed pension would be guaranteed by the Government. 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 APY would be launched from 1st June, 2015. The
existing subscribers of Swavalamban Scheme would be automatically migrated to
APY, unless they opt out.
Benefit of APY: Fixed
pension for the subscribers ranging between Rs. 1000 to Rs. 5000, if he joins
and contributes between the age of 18 years and 40 years. The contribution
levels would vary and would be low if subscriber joins early and increase if he
joins late.
Eligibility for
APY: Atal Pension Yojana
(APY) is open to all bank account holders who are not members of any statutory
social security scheme.
Age of joining and
contribution period: The minimum age of
joining APY is 18 years and maximum age is 40 years. Therefore, minimum period
of contribution by the subscriber under APY would be 20 years or more.
Focus of APY:
Mainly targeted at unorganised sector workers.
Enrolment and
Subscriber Payment: All bank account
holders under the eligible category may join APY with auto-debit facility to
accounts, leading to reduction in contribution collection charges.
Enrolment
agencies: All Points of Presence (Service
Providers) and Aggregators under Swavalamban Scheme would enrol subscribers
through architecture of National Pension System.
Operational Framework
of APY: It is Government of India Scheme, which
is administered by the Pension Fund Regulatory and Development Authority. The
Institutional Architecture of NPS would be utilised to enrol subscribers under
APY.
Funding of APY: Government would
provide (i) fixed pension guarantee for the subscribers; (ii) would
co-contribute 50% of the subscriber contribution or Rs. 1000 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.
Age of Joining,
Contribution Levels, Fixed Monthly Pension and Return of Corpus to the nominee
of subscribers
The Table of
contribution levels, fixed monthly pension to subscribers and his spouse and
return of corpus to nominees of subscribers and the contribution period is
given below. For example, to get a fixed monthly pension between
Rs. 1,000 per month and Rs. 5,000 per month, the subscriber has to
contribute on monthly basis between Rs. 42 and Rs. 210, if he joins at the age
of 18 years. For the same fixed pension levels, the contribution would range
between Rs. 291 and Rs. 1,454, if the
subscriber joins at the age of 40 years.
