A Look At The Atal Pension Yojana And What it Means For Pensioners

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    Keeping in mind the fact that the country does not have a robust social security mechanism in terms of monetary benefits one receives when one is old, the Union Budget 2015-16 has offered an interesting option.

    It is the Atal Pension Yojana, which was announced by Finance Minister Arun Jaitley in the Union Budget.

    Also read: Atal Pension Yojana: What is the Procedure for Opening an Account?

    A Look At The Atal Pension Yojana And What it Means For Pensioners
    The objective of the scheme is to provide a defined pension. What this means is that if you wish to get Rs 2000 per month as pension after 15 years, then your contribution would be determined accordingly.

    What makes the scheme interesting is that the government will also contribute 50 per cent of the beneficiaries' premium. But, that is restricted to just Rs 1,000 each year, for five years. Also, the accounts have to be opened before Dec 31, 2015 for you to qualify the contribution from the government.

    Features of the Atal Pension Yojana

    1) Pension is restricted

    You are permitted to contribute under the scheme when you are between the age of 18-40 years. The amount of pension that you would get ranges from Rs 1000 to Rs 5000.

    2) Targeted at small scale sector workers

    3) How To Open An Account under the Atal Pension Yojana?

    The government intends to use the infrastructure provided by the National Pension Scheme for the purpose. All aggregators under the Swavalamban Scheme would help in the enrollment. At the moment there are many banks in the public and private sector that open an account under the NPS. It's possible that the same set of banks like State Bank of India, Axis Bank, Allahabad Bank, State Bank of Mysore etc.

    4) How the government contributes?

    The government would contribute 50 per cent of the premium, while the cap for the government has been fixed at Rs 1000.

    How To Calculate The Premium Under the Atal Pension Yojana?

    Here is a quick ready reckoner table that would show you how much you need to contribute to get a pension of Rs 5000 per month.

    Age on contributing to the Yojana Years an Individual Has Contributed Rough Calculation of Monthly Contribution (in Rs) Monthly Pension That A Subscriber Receives (in Rs) Return To The Family (in Rs )
    18 42 210 5000 8.5 lakhs
    20 40 248 5000 8.5 lakhs
    25 35 376 5000 8.5 lakhs
    30 30 577 5000 8.5 lakhs
    35 25 902 5000 8.5 lakhs
    40 20 1454 5000 8.5 lakhs

    Should You Opt For The Atal Pension Yojana?

    For workers from the unorganised sector or the small scale sector it makes sense to subscribe to the Atal Pension Yojana. One must admit that the pension amount of Rs 5000 is very low. Not sure even how individuals even in the smaller cities can survive on such small amount.

    Nonetheless, the government has made a good start for those that want pension, but are not working in the government sector.

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