Atal Pension Yojana (APY), a government’s minimum guaranteed pension scheme specially for workers in the unorganised sector has performed far better than most pension plans. The scheme has given over 11% returns in the last one year. LIC Pension Fund has given 10.94% in the last one year, SBI Pension Fund has generated 11.24% and UTI Retirement Solutions has given 11.01% in the same time period, shows data from Value Research. What does it mean for a subscriber? Will he receive a higher pension amount?
APY provides a minimum pension ranging from ₹1,000 to ₹5,000 on attaining the age of 60. But if your contributions earn more than the assumed rate of return for the minimum guaranteed pension, the excess sum earned would be given to you as an additional benefit.
“If the actual returns on the pension contributions are higher than the assumed returns for minimum guaranteed pension, over the period of contribution, such excess shall be credited to the subscriber’s account, resulting in enhanced scheme benefits to the subscribers,” says PFRDA.
However if the actual realised returns on the pension contributions are less than the assumed returns for minimum guaranteed pension, over the period of contribution, such shortfall shall be funded by the Government.
Atal Pension Yojana completed its five years of implementation in May this year with over 2 crore workers under its ambit. The scheme was launched in 2015 by Prime Minister Narendra Modi to deliver old age income security particularly to the workers in the unorganised sector. APY aims to provide a guarantee of minimum pension after 60 years of age.
Any Indian citizen between 18 and 40 years of age can subscribe to Atal Pension Yojana. The amount of pension is guaranteed for lifetime to spouse on death of the subscriber and lastly, in the event of death of both the subscriber and the spouse, entire pension corpus is paid to the nominee.
In April, PFRDA had temporarily stopped auto-debiting savings account of the subscribers for APY contribution till June 30. This was done to protect the subscribers from financial impact of coronavirus crisis. Auto debit for APY contributions resumed from July 1. Any pending contributions towards the scheme, for April to August 2020 can be paid by September 30 without any penalty.