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)
HELLO SIR,
i just want 2 knw that what if i die before 60 . will my husband get any pension.
Hi Pushpita,
If you die before 60, then your nominee will get the balance amount.
Hi
i would like to know the difference between the two pension schemes one which was earlier named swawlamban for people from unorganised sector and one which is now APY.
Is the old swawlamban pension scheme applicable now or all the subscribers are transferred to this APY .
i had applied for NPS swawlamban in april 2014 and would like to continue with the contribution of 1000 per month .
will it be still possible .?
Hi Jayesh,
NPS Swavalamban has been merged with APY. So, you cannot continue with NPS Swavalamban Yojana anymore.
sir i have opened the pension account on my saving ac 33007682107 monthly installment 752 first instalment has been deducted. today i come to know that income tax payee are not elegible for pension scheme.i am income tax payee.sir what should i do.what is the procedure to close the pension account. please reply and solve my problem
Hi Auchitya,
You need to check the process to close your account with the aggregator or POP-SP.
sir,
will you please give email ID of Some officials who can help me to Sort out MY problem of Transferring NPS TO ATAL PENSION YOJANA
Hi Santosh,
You can try these toll free numbers for further assistance- 1800-180-1111 / 1800-110-001.
Can Spouse be a nominee in this scheme ???
Hi Deepak,
It is better to have a nominee other than your spouse.
Thanks so much for your suggestion.
You are welcome Deepak!
Hi Sir,
I have already taken the 2 schemes –>Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)
&
Pradhan Mantri Suraksha Bima Yojana (PMSBY)
Now just wanted to know that can I go for the 3rd scheme also, Atal Pension Yojana(APY)…
Will there be any problem in getting benefits from all the schemes in future…
Thanks 🙂
Hi Sonu,
If you are eligible for APY, then there won’t be any problem getting benefits from all these schemes.
i aleady have swavlamban pension scheme (nps) ..
atal pension yojan & swavlamban scheme both are same are not??
i have nps number ..iam not tax payeer
Hi Shashi,
Atal Pension Yojana & Swavalamban Scheme were two different schemes, but have been merged now.
Dear sir,
I want to know is this corpus amt after account holder death is guaranteed or its related to market value
Hi Vishal,
Corpus amount is guaranteed by the government and it is the minimum amount the nominee will get after the subscriber’s death after 60 years of age. However, depending on the returns it generates, the corpus amount could be higher than the guaranteed amount.
Sir, i am 35 and not married, i want pension, but what about my corpus, can i give my cousin sister, or some friend name in nominee
Hi Raj,
You need to mention the nominee name and your relationship with the nominee in the application form. As long as you are able to do it, you can mention anybody as your nominee.
singheshwar.Bihar.
Sir, I am a New Pension Scheme Holder and an Income Tax Payer. Can I Apply for Atal Pension Yojana??????
Whether New Pension Scheme falls under any social security schemes to which this Atal pension yojana does not extend to???
Plz reply soon…as I want to enroll for it immediately…
Hi Sandhya,
Every Indian citizen is eligible for this scheme, so you can get this account opened. However, as you are an income tax payer, you will not get any government contribution in your APY account.
Can I change after my nominee in Atal Pension Yojana scheme? Because cureently I am not married so guardian is my nominee but when i want to change nominee after some years then is it possible or not?
Yes Mahesh, it is allowed to change the nominee in this account.
Dear sir,
I am having govt job and thus have nps a/c with pran nos. As per above comments I think I am eligible for apy but without govt. Contribution. My question is can we have two different pran nos possible for one person? One for regular nps and one for apy? And whether both (regular nps+apy) will be combined at the time of retirement?
Please guide. Thank you.
Hi Saptarshi,
The government has made it clear that NPS Lite accounts will be migrated to APY. But, how NPS & APY accounts will co-exist for an individual, it is still not clear. So, you will have to wait some more time for further clarification in this matter.
Can govt employ open this account?
Yes, a government employee can open this account, but will not get the government contribution.
if anybody made payment under this scheme 1 year or more than 1 year after some years he stop the make payment against this scheme then what will the procedure of refund of deposited amount that he earlier made under this schme
Hi Alok,
In case you discontinue depositing amount, your account will get inactive first & closed subsequently. However, I don’t know the procedure to withdraw the balance midway.
i have an account with axis bank can i apply for apy in this bank
Hi Samanta,
You need to check it with your Axis Bank branch.
Dear sir,
I want to know if a person pays premium for 2 yrs and in any case he dies…does his wife is eligible for pension from the same time.
No Varun, the nominee will get the balance amount with interest earned.
dear sir
how long ill get pesion & what about my corpus amount???
pls reply.
Hi Puran,
You’ll get the pension payment life long till you are alive. Corpus amount will be given to your nominee.
Hi,
Shiv Kukreja
I am a business man. I want to open an APY account in the same of my my wife.She is not a tax payer till now.
1.What if she need to pay income tax in near future,how to deal with this Govt. Co Contribution of 1000/-.
As I know gov contribute only for five years to Non tax Payer.
Right now non tax payer..Is there any option to give a declaration in future the moment she pays tax?
2. The mothly contribution for pension 5000/- is 689/-.So does this amount include any Govt contribution..Will it change if made any changes to declaration?
3. How this Gov co contribution works.Does whor r eligible get more than 8.50000.
or who are non eligable get less than thst amount.Is table above show which group of contributers?
Hi Mr. Ghosh,
1. I am not clear how the government will come to know whether the subscriber is a tax payer or not and whether the subscriber is covered under any other social security scheme or not. The system has not been disclosed by the government. In your case, once your wife becomes a tax assessee and you give such declaration, the government should stop its co-contribution.
2. Rs. 5,000 pension amount has been calculated considering the government co-contribution. I think it should fall in the absence of government co-contribution.
3. Table above considers the government co-contribution.
hello sir
when i open the APY in canara bank but the bank manger told me that u are already register for NPS scheme but i have no any account in nps. so what can i do in these matter.
Hi Jaydip,
I don’t know how to convince the bank official in this case.