Atal Pension Yojana (APY)
1.
Introduction
1.1
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 guaranteed pension benefits at the age of 60.
1.2
The Government announced the introduction of
universal social security schemes in the Insurance and Pension sectors for all
Indians, specially the poor and the under-privileged, in the Budget for the
year 2015-16. Therefore, it has been announced that the Government will launch
the Atal Pension Yojana (APY), which will provide a defined pension, depending
on the contribution, and its period. 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). Under the
APY, the subscribers would receive the fixed minimum 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 be based 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 any subscriber under APY would be 20 years or more. The benefit of fixed
minimum pension would be guaranteed by the Government. The APY would be
introduced from 1st June, 2015.
2.
Benefit of APY

1 The Scheme is
subject to the approval of the Government.
2.1 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.
3.
Eligibility for APY
3.1
Atal Pension Yojana (APY) is open to all bank
account holders. The Central Government would also co-contribute 50% of the
total contribution or Rs. 1000 per annum, whichever is lower, to each eligible
subscriber account, for a period of 5 years, i.e., from Financial Year 2015-16
to 2019-20, who join the NPS between the period 1st
June, 2015 and 31st December, 2015 and who are
not members of any statutory social security scheme and who are not income tax
payers. However the scheme will continue after this date but Government
Co-contribution will not be available.
3.2
The Government co-contribution is payable to
eligible PRANs by PFRDA after receiving the confirmation from Central Record
Keeping Agency at such periodicity as may be decided by PFRDA.
4.
Age of joining and contribution period
4.1 The minimum age of joining APY is 18
years and maximum age is 40 years. The age of exit and start of pension would
be 60 years. Therefore, minimum period of contribution by the subscriber under
APY would be 20 years or more.
Focus of APY
5.1
Mainly
targeted at unorganised sector workers.
6.
Enrolment and Subscriber Payment
6.1
All bank account holders under the eligible category may join APY with
auto-debit facility to accounts, leading to reduction in contribution
collection charges. The subscribers
should keep the required balance in their savings bank accounts on the
stipulated due dates to avoid any late payment penalty. Due dates for monthly
contribution payment is arrived based on the deposit of first contribution
amount. In case of repeated defaults for specified period, the account is
liable for foreclosure and the GoI co-contributions, if any shall be forfeited.
Also any false declaration about his/her eligibility for benefits under this
scheme for whatsoever reason, the entire government contribution shall be
forfeited along with the penal interest. For enrolment, Aadhaar would be the
primary KYC document for identification of beneficiaries, spouse and nominees
to avoid pension rights and entitlement related disputes in the long-term. The
subscribers are required to opt for a monthly pension from Rs. 1000 - Rs. 5000
and ensure payment of stipulated monthly contribution regularly. 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 once in year during the month of April. Each
subscriber will be provided with an acknowledgement slip after joining APY
which would invariably record the guaranteed pension amount, due date of
contribution payment, PRAN etc.
7.
Enrolment agencies
7.1 All Points of Presence (Service
Providers) and Aggregators under Swavalamban Scheme would enrol subscribers
through architecture of National Pension System. The banks, as POP or
aggregators, may employ BCs/Existing non - banking aggregators, micro insurance
agents, and mutual fund agents as enablers for operational activities. The
banks may share the incentives received by them from PFRDA/Government, as
deemed appropriate.
8.
Operational Framework of APY
8.1 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. The offer document of APY including the account opening form would be
formulated by PFRDA.
9.1 Government would provide (i) fixed
pension guarantee for the subscribers; (ii) would co-contribute 50% of the
total 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.
10.
Migration of existing subscribers of Swavalamban Scheme
to APY
10.1 The
existing Swavalamban subscriber, if eligible, may be automatically migrated to
APY with an option to opt out. However, the benefit of five years of government
Co-contribution under APY would not exceed 5 years for all subscribers. This
would imply that if, as a Swavalamban beneficiary, he has received the benefit of
government Co-Contribution of 1 year, then the Government co-contribution under
APY would be available only 4 years and so on. Existing Swavalamban
beneficiaries opting out from the proposed APY will be given Government
co-contribution till 2016-17, if eligible, and the NPS Swavalamban continued
till such people attained the age of exit under that scheme.
10.2
The existing Swavalamban subscribers between
18-40 years will be automatically migrated to APY. For seamless migration to
the new scheme, the associated aggregator will facilitate those subscribers for
completing the process of migration. Those subscribers may also approach the
nearest authorised bank branch for shifting their Swavalamban account into APY
with PRAN details.
10.3
The Swavalamban subscribers who are beyond
the age of 40 and do not wish to continue may opt out the Swavalamban scheme by
complete withdrawal of entire amount in lump sum, or may prefer to continue
till 60 years to be eligible for annuities there under.
11.
Penalty for default
11.1
Under APY, the individual subscribers shall have an option to make the
contribution on a monthly basis. Banks are required to collect additional
amount for delayed payments, such amount will vary from minimum Rs. 1 per month
to Rs 10/-per month as shown below:
·
Rs.
1 per month for contribution upto Rs. 100 per month.
·
Rs.
2 per month for contribution upto Rs. 101 to 500/- per month.
·
Rs.
5 per month for contribution between Rs 501/- to 1000/- per month.
·
Rs.
10 per month for contribution beyond Rs 1001/- per month.
The
fixed amount of interest/penalty will remain as part of the pension corpus of
the subscriber.
11.2
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.
12.
Operation of additional amount for delayed payments
12.1
APY module will raise demand on the due date
and continue to raise demand till the amount is recovered from the subscriber’s
account.
12.2
The due date for recovery of monthly
contribution may be treated as the first day /or any other day during the
calendar month for each subscriber. Bank can recover amount any day till the
last day of the month. It will imply that contribution are recovered as and
when funds are available any point during the month.
12.3
Monthly contribution will be recovered on
FIFO basis- earliest due instalment will recovered first along with the fixed
amount of charges as mentioned above.
12.4 More than one monthly contribution can
be recovered in month subject to availability of the funds. Monthly
contribution will be recovered along with the monthly fixed due amount, if any.
In all cases, the contribution is to be recovered along with the fixed charges.
This will be banks’ internal process. The due amount will be recovered as and
when funds are available in the account.
13.
Investment of the contributions under APY
13.1 The amount collected under APY are
managed by Pension Funds appointed by PFRDA as per the investment pattern
specified by the Government. The subscriber has no option to choose either the
investment pattern or Pension Fund.
14.
Continuous Information Alerts to Subscribers
14.1
Periodical information to the subscribers
regarding balance in the account, contribution credits etc. will be intimated
to APY subscribers by way of SMS alerts. The subscribers will have the option
to change the non – financial details like nominee’s name, address, phone
number etc whenever required.
14.2 All
subscribers under APY remain connected on their mobile so that timely SMS
alerts can be provided to them at the time of making their subscription,
auto-debit of their accounts and the balance in their accounts.
15.
Exit and pension payment
15.1
Upon completion of 60 years, the subscribers
will submit the request to the associated bank for drawing the guaranteed
monthly pension.
15.2
Exit before 60 years of age is not permitted,
however, it is permitted only in exceptional circumstances, i.e., in the event
of the death of beneficiary or terminal disease.
16.
Age of Joining, Contribution Levels, Fixed Monthly Pension and Return of Corpus
to the nominee of subscribers
16.1 The Table of contribution levels, fixed
minimum 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.
9
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