No higher pension under APL

There is no ongoing consideration to raise the maximum pension threshold under Atal Pension Yojana (APY) beyond Rs 5,000. But multiple family members aged between 18-40 can opt for this scheme and increase the overall pension corpus, PFRDA chairman Deepak Mohanty said. APY offers five monthly pension slabs between Rs 1,000-5,000.

Speaking on the increasing role of 5.33 crore subscriber strong APY in India’s pension ecosystem, Mohanty highlighted how there still remains a huge lacunae in terms of realising its potential.

“Out of 49 crore PMJDY accounts, 25 crore accounts belong to people aged between 18-40. For FY23, we aim to add 1.3 crore subscribers to APY. While this target is low, we need to strike a balance between the doable and aspirational, since APY is a voluntary contributory scheme, dependent on citizen awareness ”.

On the performance of Regional Rural Banks in driving APY penetration, Mohanty highlighted that they have been performing exceedingly well, even achieving 300-400% more than their set targets. Also, APY returns are set to stay at about 9% in the near future, much lower than returns generated by NPS’ equity segment, which generates 12+% returns.

Long way to MARS
Recently, PFRDA also announced its intention to soon launch a minimum assured returns scheme (MARS). However, there’s a caveat. One of the factors that presently drives adoption of pension products in India is the low cost. This means low capital and liquidity in such funds.

If a minimum return is to be assured sans government funds, the premium required to be paid by the subscriber will jump, which could prove counterproductive in PFRDA’s vision to make pension more attractive to government and private sector employees alike.

Nudging banks 

Despite pushes like e-APY fueling the scheme’s subscription digitally , RRBs and banks, both new and old, need to work more towards inculcating retirement awareness amongst people, said Mohanty.