Budget 2024: The government is considering a proposal to increase the minimum guaranteed amount under its popular social security initiative, Atal Pension Yojana (APY). Currently, the scheme offers a guaranteed pension ranging from Rs 1,000 to Rs 5,000 per month, depending on the subscriber’s contribution. According to the Economic Times, the government may double this minimum guaranteed amount to Rs 10,000. A decision on this proposal is expected around the Budget presentation, scheduled for July 23.
Proposals to make scheme more attractive
As of June 20, there have been more than 66.2 million enrollments in the Atal Pension Yojana, with 12.2 million new accounts added in the financial year 2023-24 alone. According to the reports, to make the scheme more attractive, proposals are being examined to increase the guaranteed amount.
These are being examined. Earlier this year, Pension Fund Regulatory and Development Authority (PFRDA) Chairman Deepak Mohanty stressed the need to increase the guaranteed pension amount, expressing concerns over its adequacy in meeting future needs.
Economically deprived people get help
Finance Minister Nirmala Sitharaman has previously underlined the success of the Atal Pension Yojana keeping in mind the poor and lower-middle class people. Introduced as part of the National Pension System (NPS), the Atal Pension Yojana allows subscribers to exit the scheme at the age of 60. Individuals who pay income tax are excluded from enrolling in the scheme, thereby focusing on assisting the economically disadvantaged.
Atal Pension Yojana
Atal Pension Yojana (APY), a pension scheme for citizens of India is focused on the unorganized sector workers. Under the APY, guaranteed minimum pension of Rs 1,000 or 2,000 or 3,000 or 4,000 or 5,000 per month will be given at the age of 60 years depending on the contributions by the subscribers. Any Citizen of India can join APY scheme.
The benefit of minimum pension under Atal Pension Yojana would be guaranteed by the government in the sense that if the actual realized returns on the pension contributions are less than the assumed returns for minimum guaranteed pension, over the period of contribution, such shortfall shall be funded by the government. On the other hand, if the actual returns on the pension contributions are higher than the assumed returns for minimum guaranteed pension, over the period of contribution, such excess shall be credited to the subscriber’s account, resulting in enhanced scheme benefits to the subscribers.
At present, a subscriber under the National Pension System (NPS) is eligible to get tax benefit for the contribution, up to a ceiling, and even for the investment returns on such contributions. Further, the purchase price of the annuity on exit from NPS is also not taxed and only the pension income of the subscribers are considered to be part of normal income and taxed at the appropriate marginal rate of tax, applicable to the subscriber. Similar tax treatment is applicable to the subscribers of APY.
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