The government is considering a proposal to raise the pension limit under Atal Pension Yojana (APY) to up to Rs 10,000 per month from the existing slab of up to Rs 5,000, a top official said on Tuesday.
Thinking of investing in Atal Pension Yojana (APY)? There is some good news for you. The government is considering a proposal to raise the pension limit under Atal Pension Yojana (APY) to up to Rs. 10,000 per month from the existing slab of up to Rs. 5,000, news agency Press Trust of India reported, citing a top government official. APY or Atal Pension Yojana is a pension scheme focused on the unorganised sector. If such a proposal goes through, an individual will be able to invest in APY to earn a pension of Rs. 10,000 per month after maturity.
Currently, APY offers pre-defined returns, ranging from Rs. 1,000 per month to Rs.5,000 per month.
Here are 10 things to know about APY or Atal Pension Yojana:
1. There is a need to increase the value of pension under APY, Press Trust of India cited Department of Financial Services Joint Secretary Madnesh Kumar Mishra as saying, at a conference organised by pension regulator PFRDA.
2. “We have seen the proposal (sent by PFRDA) of increasing the pension value to (up to) Rs.10,000 per month and it is under our active examination,” he said.
3. PFRDA Chairman Hemant G Contractor said the proposal has been sent to the finance ministry with an aim to increase the APY subscriber base. “Currently, we have five slabs of pension from Rs. 1,000-5000 per month. There have been a lot of feedback from the market asking for higher pension amounts because many people feel that Rs. 5,000 at the age of 60 years, 20-30 years from now, will not be sufficient,” he said.
4. The minimum age to invest in Atal Pension Yojana has been set at 18 years. The maximum stipulated age to enter and contribute to an APY account is 40 years. APY works on pre-defined contribution slabs which enable an investor to reach his or her fixed pension goal of Rs. 1,000, Rs. 2,000, Rs. 3,000, Rs. 4,000 and Rs. 5,000 at present. The earlier one starts, the lower is the monthly contribution required to reach the desired pension goal, say financial planners.
5. Minimum investment: APY comes with three modes of payment. These are monthly, quarterly and half-yearly. That means a minimum of two contributions are required every year. An 18-year-old subscriber to APY, for example, is required to pay Rs. 42 per month or Rs.248 half-yearly for a pension of Rs. 1,000 per month after he or she attains the age of 60 years.
6. “We have placed this proposal with the government that it should be increased to up to Rs.10,000,” Press Trust of India cited Mr Contractor as saying.
7. PFRDA has sent two more proposals to the ministry – auto enrolment for APY and raising the maximum age bar to enter the scheme to up to 50 years.
8. An increase in the same by another 10 years will help in expanding the subscriber base, he added.
9. As of now, the subscriber base of APY is 1.02 crore.
10. PFRDA added about 50 lakh new subscribers under the scheme in 2017-18 and hopes to add another 60-70 lakh in the ongoing financial year, Mr Contractor added.