Atal Pension Yojana, an ambrosia for unorganized sector

News Bharati    20-Apr-2019
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The Atal Pension Yojana (APY) launched by the NDA Government headed by Prime Minister Narendra Modi has evoked a massive response from the people. The pension scheme launched for the workers in the unorganized sector in 2015. Pension fund regulator PFRDA has reached a subscriber base of 2.65 crores in its flagship National Pension System (NPS) and Atal Pension Yojana (APY) schemes and hopes to cover nearly 2.72 crore subscribers by the end of the current financial year. It includes nearly 1.45 crore subscribers under APY and the remaining 1.20 crore have NPS accounts. 

The Atal Pension Yojana is mainly aimed for maids, gardeners, delivery boys and many other workers in the unorganized sector. Hard working labourers are always worried about their future. But NDA government launched a scheme in 2015 and these unorganized workers received an answer for their worries. The scheme implemented for providing a defined pension system for the poor and underprivileged depending on the contribution.

With the successful implementation of Pradhan Mantri Jan Dhan Yojana and embracing a huge population to avail the banking benefits with opening a zero balance account with the continuation of Jan Dhan Yojana, a National Pension Scheme (NPS) which is known as Atal Pension Yojana (APY) was affected and passed in the Union Budget of 2015-16 by our honourable Finance Minister Arun Jaitley.

To address the longevity risks among the workers in the unorganised sector and to encourage the workers in the unorganised sector. As per data released in 2015, government urged these workers to voluntarily save for their retirement, who constitute 88% of the total labour force of 47.29 crores as per the 66th Round of National Sample Survey Office (NSSO) Survey of 2011-12, but do not have any formal pension provision, the Government had started the Swavalamban Scheme in 2010-11. The NSSO is responsible for the conduct of large scale sample surveys in diverse fields on All India basis. However, coverage under the Swavalamban Scheme is inadequate mainly due to lack of clarity of pension benefits at the age after 60.

The APY is primarily for the unorganized sectors who joined the national pension system (NPS) administered by the pension fund regulatory and development authority (PFRDA). However, all citizens of the country in the eligible category may join the scheme.

“APY is not only a flagship scheme of the government, but it is also an important instrument for inclusion...within three years, the scheme has been able to mobilise nearly 69 lakh accounts," Financial Services Secretary Rajiv Kumar said in his message in 2017.

Depending on the contribution of a person, he or she will get Rs. 1000 to Rs. 5000 pension per month after completing 60 years of age. This is possible if a person joins in the age of 18 to 40 years.

The benefit of the minimum return under APY would be guaranteed by the government in the sense that if the actual realised returns on the pension contribution are less than assumed returns for the minimum guaranteed scheme.

Therefore, a minimum period of contribution by the subscriber under APY would be 20 years or more. The benefit of a 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

Highlights of APY 

Eligibility for APY: Atal Pension Yojana (APY) is open to all bank account holders who are not members of any statutory social security scheme.

The 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 the subscriber joins early and increase if he joins late.

Age of joining and contribution period: The minimum age of joining APY is 18 years and maximum age is 40 years. Therefore, the minimum period of contribution by the subscriber under APY would be 20 years or more.

The 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 a reduction in contribution collection charges.

Enrolment agencies: All Points of Presence (Service Providers) and Aggregators under Swavalamban Scheme would enrol subscribers through architecture of the 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 utilized 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 an 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.

 

After 3 years of the scheme--

Atal Pension Yojana (APY) Scheme’s subscriber base crossed 1 Crore on completion of 3 years of the Scheme launch. APY was launched by the Prime Minister of India, Narendra Modi at a function in Kolkata 9th May,2015 and the current number of subscribers stand at 1.10 Crore.

To commemorate the 3 years of completion of the Scheme and its launch, Pension Fund Regulatory Development Authority (PFRDA) in coordination with the Department of Financial Services, Ministry of Finance, Government of India organised a massive outreach campaign “APY Formation Day” across the country in 2018 to enhance the enrolments in APY by the banks and Department of Posts.

As per data released in 2018

The subscriber base in APY has grown manifold to reach the current position and APY is offered by all the banks and post offices. Across the country, 1.60 lacs branches which include 20 thousand post offices offer the services of opening APY account for their customers. Out of this branch network, nearly 90% of the branches have mobilised one or more APY account in the last 3 years.

Rs. 3950 crores of contribution have been collected under the Atal Pension Yojana (APY) Scheme. The Scheme has generated around.9.10 % CAGR since its inception until March 2018.