Atal Pension Yojana in Mumbai
The Atal Pension Yojana (APY) is a pension fund backed by government. It was announced in the budget 2015-2016, aiming to provide social security to the people working in unorganized sector, after their retirement. The APY scheme replaces the Swavlamban Yojana of UPA government.
What is Atal Pension Yojana?
The Atal Pension Yojana is designed to promote voluntary saving for the retirement among the people who are working in the unorganized sector of the country. In the scheme the government will not only guarantee a fixed amount of pension after the retirement of the subscriber, but it will also contribute to the accounts of the subscriber on behalf of them.
The minimum fixed pension that a subscriber can receive after he or she is retired is between a minimum of rupees one thousand per month to a maximum of rupees five thousand per month. This minimum and maximum amount of fixed retirement pension income also varies with the contribution that a subscriber will make throughout the life of the scheme. The contribution amount will also vary with the age of the contributor. The minimum age at which someone can subscribe for the Atal Pension Yojana is 18 years and the maximum age limit is 40 years. The subscriber is eligible is get the fixed pension after sixty years of age.
There is also a provision of co-contribution from the government on behalf of the subscriber. On an annual basis, the government co-contribution will match either the fifty percent of the contribution made by the policy holder or rupees one thousand, depending upon the amount which is lowest. However, the co-contribution of the government will be made for only 5 years starting from FY15-FY16 to FY19-FY20. There are also eligibility criteria for the co-contribution by the government.
Eligibility Criteria for Atal Pension Yojana
The person should be a citizen of India to subscribe to the policy. However, he or she should be between 18-40 years of age and they should also have a savings account in any bank with a mobile number.
Eligibility Criteria for Government Co-Contribution
Any subscribers of the Atal Pension Yojana who is uncovered by any other social security scheme and does not pay income tax are eligible to get government co-contribution in their APY account.
Minimum and Maximum Contribution in APY
The amount of contribution made by the subscriber varies with the age.
| Subscriber’s Age | Minimum Contribution on a Monthly Basis (in Rs) | Monthly Income After 60 Years of Age (in Rs) | Maximum Contribution on a Monthly Basis (in Rs) | Monthly Income After 60 Years of Age (in Rs) |
| 18 Years | 42 | 1000 | 210 | 5000 |
| 40 Years | 291 | 1000 | 1454 | 5000 |
Benefit and disadvantages of Atal Pension Yojana
The major disadvantages of Atal Pension Yojana is that there is a high inflation risk especially for people living in urban area and the internal rate of return of the scheme is not much different from the EPF and PPF schemes.
Popularity of APY in Mumbai
The APY scheme is not yet very popular in Mumbai because of the following reasons:
- The lock-in period for the APY scheme is too long.
- There is no clarity on the tax-treatment of the scheme.
- The internal rate of return is not enough to match the inflation rate.