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)
Monthly pension and one time money both are given or any one
Hi Amit,
Both of them get paid, pension, till you are alive and corpus, to your nominee.
I am 40 years 5 months i want to know if I am eligible for the Atal pension
Yojana scheme
You need to get it confirmed with any of the aggregators Regina.
Indicative Return of Corpus to the nominee of the subscribers …,what is meaning of this….. second question…….my wufe is below40 and only have account in SBI…so willshe is eligible for government contribution…and government will pay what 50? or rupees 1000 per annum?
“Indicative Return of Corpus to the nominee of the subscribers” ……what is this I have not understood that please explain…next question ……till I die I will have pension or not?……and last question if government changes the scheme will be valid or not?I mean if next government comes and stops the scheme what to do?
Hi Amit,
1. Corpus is the accumulated balance amount which your nominee will get in your absence after you turn 60. This accumulated amount is the result of your own contributions per month based on your entry age.
2 You’ll get the pension amount non-stop till you are alive.
3. My knowledge is as good as yours in this matter. So, I don’t know what will happen & what to do if the NDA government gets replaced with some other party.
Sir
I am working in pvt ltd company my age is 31 i know that i can subscribe atal pension yojana but my wife who is 30 yrs old and simply house wife can she subscribe this yojana. If yes then can we both getting 5000 each as pension if we monthly invest 577 rs
Another question is what happen if i died between 31 to 60. Can my wife getting my 5000 rs pension per month or my nominee who is my son which is now 4 yrs getting accumilated amount and benifit. Plz plz help and reply. Thanking you
Regards sachin
Hi Sachin,
1. If both of you get the government contribution, then you’ll get the pension amount of Rs. 5,000 per month as per your respective contributions.
2. If you die between 31 to 60, your nominee will get the balance amount with interest.
Sir my date birth is 23/07/1975 may i eligible for APY Scheme
Yes Honnurappa, you are eligible for this scheme.
sir i am a 26 year old goverment teacher i am eligible for this pension yojna
Yes Jyoti, every Indian citizen, aged 40 years or less, is eligible for this scheme.
Hi,
My current age is 29 years and I have started to invest in this pension scheme.
How many years will this continue? and from what age will I start getting pension? How many years will I receive pension?
Hi Samiran,
You need to deposit money for 31 years till you turn 60. You’ll start getting pension from 60 years of age and will keep getting it till you are alive.
Thanks Shiv.
yes shiv my birth date is 5 – 5 – 1975 and my instalment of 1454 has been deducted from my saving account of dena bank so how can be possible one bank is accepting the birth date before 1 -6-1976 and the other bank is denige the rules are same for me and mr bhasker isn’t true shiv and I have also issued a pran number copy as a proof from my bank manager and he said that it is 100% comfer that you will get all benefits under this scheme because your instalment has been deducted from the system
Hi Nitesh,
I don’t think Bhaskar is lying about it. I am sure the form he has got from the Bank of India branch carries the date of birth to be 01.06.1975 or before. Probably, the bank has mistakenly printed it to be 01.06.1975.
Dear Sir
My self working in PSU and my wife is house wife. Whether we both are eligible for Atal pension scheme ?
Further, after the death of the husband after 60 ,can wife get both the pension.
Yes Mr. Sahoo, after the death of the husband after 60, his wife can claim both the pensions.
I am a LIC agent.
Whether i am applicable to join APY or not?
Whether i would get govt. contribution or not?
I am married.Can i make my husband my nominee?
If i die anytime before 60yrs what type of benefit would my husband get?
Hi Puja,
1. Every Indian Citizen, aged 40 years or less, is eligible for this scheme.
2. If you are not required to pay income tax or you are not covered under any other social security scheme, then you’ll be eligible for the government contribution.
3. As the spouse will get the pension in your absence after 60, it is better to have your son/daughter to be the nominee.
4. Your nominee will get the balance amount with interest.
I am a government employee and I am a member of provident fund but due to low salary,income tax is not deducted from my salary till date,but on attaining higher salary income tax will be deducted.So whether i would join APY or not?
if yes,My age is 24years 4months.So for 5000/m which slab is applicable—–for age 24yrs RS 346/m or for 25yrs Rs 376/m?
If i die anytime before 60yrs what type of benefit would my nominee(say spouse) get and how to apply for that?
Hi Krishna,
As you are already covered under PF scheme, you will not get the government contribution of up to Rs. 1,000 per annum. If you die before 60, your nominee will get the balance amount lying in the account.
My birthdate is 18th nov 1974 am i eligible for atal pension scheme
No Raj, you are not eligible for this scheme.
My birthdate z 18 nov 1974 am i eligible for atal pension scheme
sir,
I am NRI .Iam egible for this scheme(Adal pension yojana)
No Suresh, NRIs are not eligible for this scheme.
I am a central government employee and a NPS subscriber and aged 28 years. My wife is employed in private firm and aged 31 years. Both of us are income tax payee. Can both of us join the scheme. I understand that we will not get govt. contribution.
Yes Roshan, you can join this scheme.
Hi
If i fill the normal form for Atal pension,did bank will open my PRAN account or i have to submit another form for opening PRAN first..
Hi Saju,
You need to check it with the bank.
i have joined recently PM Jan Suraksha Beema Yojana and PM Jeevan Jyoti Beema Yojana and also I have a PPF account in SBI but i m not tax payer. Please let me know whether i can participate in APY and whether i will get the Government contribution?
Hi Kumar,
Every Indian Citizen, aged 40 years or less, is eligible for this scheme. If you are not covered under any other social security scheme, then you are eligible for the government contribution.
Hi bhaskar ,
I am 23 age person working in IT sector . I am a member of Employee provident fund.
yes , i know i am eligible for atal yojna scheme . but you are saying that you will not get government contributions. What is it mean ? i will get Pesnsion right after 60 years ?
Hi sir,
What you are mean Government Contributions ?
Hi Vigneshwaran,
Please check the post above to understand government contributions.