Hike guaranteed pension under APY: PFRDA asks Govt
APY largely caters to social security of India’s unorganized sector, offering them flexibility in terms of contributions. This means that one does not need to put aside a specific amount for their APY account every month.
The Pension Fund Regulatory and Development Authority of India (PFRDA) has approached the government, seeking a raise in the amount of pension guaranteed under the Atal Pension Yojana (APY). Currently, the scheme offers five monthly pension options, with Rs 1,000 being the minimum and Rs 5,000 being the maximum. The monthly contributions from the pensioner is calculated based on the chosen slab.
As per PFRDA, over 85% people under APY opted for the lowest bar i.e. Rs 1,000. As of 16th September 2023, APY had around 499.73 lakh subscribers, with an AUM of Rs 30,693.73 crores. While APYs subscriber base registered a 23.17% y–o-y growth, its AUM jumped by 31.53% on a year-on-year basis.
According to media reports, PFRDA chairman Deepak Mohanty highlighted how the current amount might not be enough to encourage subscribers to join the scheme. Moreover, when this money is doled out as pension in due course of time, its purchasing power would be severely diminished, adding no real value to the financial well-being of subscribers.
Mohanty noted that since APY is a government-guaranteed scheme, the monthly pension amount can only be increased if the government increases funding for APY. In short, an increase in existing pension slabs won’t be possible till the centre makes necessary budgetary provisions and grants money.
Greater Push
APY largely caters to social security of India’s unorganized sector, offering them flexibility in terms of contributions. This means that one does not need to put aside a specific amount for their APY account every month. They can deposit funds in their account as and when they have money. As of August 2023, 55% of all subscribers were aged under 25. Women made up for 46% of all participants in APY, indicating a relatively balanced gender ratio.
Anyone aged between 18-40 can sign up for it and start receiving a monthly pension amount between Rs 1,000 and Rs 5,000 once they turn 60 year. According to Mohanty, APY’s subscriber base is projected to touch 13 million by FY23-24.
PFRDA has been aggressively pushing APY, with the chairman projecting APYs subscriber base to touch 1.3 crore by the end of this financial year. Investment in APY has delivered 8.93% returns since inception (2015), and 7.53% over the last three years.