National Pension System (NPS) and Atal Pension Yojana (APY) Notes

Government Schemes are in news every now and then. These schemes also constitute a substantial part of the Economic & Social Issues paper of RBI Grade B and NABARD Grade A exams. Questions from the latest government schemes as well as some important old schemes are frequently asked in these exams. Therefore here in this blog, we are covering two important pension schemes by the government: National Pension System (NPS) and Atal Pension Yojana (APY). 

I. National Pension System (NPS) and Atal Pension Yojana (APY) Notes

1. NATIONAL PENSION SCHEME (NPS) NOTES

It is a pension cum investment scheme launched by the Government of India to provide old age security to Citizens of India. It brings an attractive long term saving avenue to effectively plan your retirement through safe and regulated market-based return. 

» Launch year: 2004 

» Ministry and Nodal Implementing Agency: Ministry of Finance and PFRDA 

» Eligibility: 

• All citizens of India between the age of 18 and 65 years are eligible.
  
• All new employees of central government service except armed forces joining services on or after 1st January 2004.
  
• All citizens’ i.e. private employees and unorganized sector workers.
  
• NRI with a bank account in India is also eligible. 
  

» Other Important Points

• NRI returns are market Linked. It offers 3 funds to subscribers Equities, Corporate bonds, Government Securities.
  
• Subscriber can exit from NPS after 10 years of account opening or attaining 60 years of age whichever is earlier. Only up to 40% of corpus withdrawn in a lump sum is exempted from tax.
  
• Union Cabinet has decided to raise the contribution of the central government to the NPS corpus from 10% to 14%.
  
• PFRDA recently announced that NPS subscriber will now have the facility to withdraw funds from their account for pursuing higher education but it is allowed after 3 years of subscription and the limit is 25% of the contribution made by subscriber-only. 

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2. ATAL PENSION YOJANA (APJ) NOTES

It is a pension scheme for workers in the unorganised sector like personal maids, drivers, gardeners etc, This social security scheme was introduced as a replacement to the previous government’s Swavalamban Yojana. 

» Launch Year: 2015 

» Ministry: Ministry of Finance 

» Other Important Points

• It is a centrally sponsored scheme.
  
• The APY will be focussed on all citizens in the unorganised sector, who join the National Pension System (NPS) administered by the Pension Fund Regulatory and Development Authority (PFRDA) and who are not members of any statutory social security scheme.
  
• Under the APY, the subscribers would receive a fixed pension of Rs. 1000 per month, Rs. 2000 per month, Rs. 3000 per month, Rs. 4000 per month, Rs. 5000 per month, at the age of 60 years, depending on their contributions, which itself would vary on the age of joining the APY.
  
• The minimum age of joining APY is 18 years and the maximum age is 40 years. Therefore, the minimum period of contribution by the subscriber under APY would be 20 years or more. The benefit of a fixed pension would be guaranteed by the Government.
  
• The Central Government would also co-contribute 50% of the subscriber’s contribution or Rs. 1000 per annum, whichever is lower, to each eligible subscriber account, for a period of 5 years, i.e., from 2015-16 to 2019-20, who join the NPS before 31st December 2015 and who are not income taxpayers.
  
• 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 the subscriber joins early and increase if he joins late. 

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This is all from us in this article about the National Pension System (NPS) and Atal Pension Yojana (APY). We hope that you liked the information given in here. For more such informative articles, keep visiting Oliveboard. 

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