Published: 18th Apr, 2019
Pension Fund Regulatory and Development Authority (PFRDA) has suggested that the government must make a matching contribution to the subscribers’ share for the Atal Pension Yojana (APY), which is meant for the unorganized sector.
Context
- Pension Fund Regulatory and Development Authority (PFRDA) has suggested that the government must make a matching contribution to the subscribers’ share for the Atal Pension Yojana (APY), which is meant for the unorganized sector.
- A similar scheme, the Prime Minister Shram Yogi Maandhan (PM-SYM), was also launched last month for informal sector workers.
About
- While both schemes have similar features, the key benefit of the PM-SYM is that the government will deposit an equal matching share in the pension account of a worker every month, which gives this scheme an edge over the APY.
- The only salient difference is that in the new scheme, the contribution burden on the subscriber will be less by 50% i.e. fifty percent of the contribution cost will be picked up by the government.
- Even if the government were to contribute 50% to APY, it will only cost ?500-600 crore annually to the exchequer, which is not a huge burden, according to PFRDA chairman.
Key Facts:-
- The new pension scheme for unorganized sector workers with monthly income of up to ?15,000 was announced in the interim budget.
- It assured monthly pension of ?3,000 to subscribers when they reach 60.
- APY, the government’s scheme promoting social security, is handled by PFRDA and targets a similar customer base and provides fixed pension options of ?1,000, ?2,000, ?3,000, ?4,000 and ?5,000 on the basis of the contribution.
- However, the government will make 50% co-contribution of the total amount or ?1,000 per annum, or whichever is lower, for a period of five years, for subscribers who opted for the scheme between June and December 2015.
Atal Pension Yojana
Benefit of APY: Fixed pension for the subscribers ranging between Rs. 1000 to Rs. 5000, if he joins and contributes between the age of 18 years and 40 years. The contribution levels would vary and would be low if subscriber joins early and increase if he joins late.
Eligibility for APY: APY is open to all bank account holders who are not members of any statutory social security scheme.
Age of joining and contribution period: The minimum age of joining APY is 18 years and maximum age is 40 years. Therefore, minimum period of contribution by the subscriber under APY would be 20 years or more.
Focus of APY: Mainly targeted at unorganised sector workers.
Significance
The subscribers are required to contribute a small amount every month during their working years. The government will also make an equal monthly contribution in the worker’s pension account. The scheme, which is under the administrative control of the labour ministry, is expected to benefit at least 100 million labourers and workers in the unorganized sector.
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