 "Interim Budget may raise pension floor for unorganised sector workers")
The government is learnt to be considering raising the minimum pension amount under the Atal Pension Yojana (APY), its flagship scheme for unorganised sector workers.
“We are considering the proposal. A decision is likely either in the Interim Budget or outside of it,” a government official said, requesting anonymity.
The Pension Fund Regulatory and Development Authority (PFRDA) had earlier written to the government seeking an increase in the guaranteed pension amount under the scheme, as the current amount may not be attractive enough for potential subscribers to enroll.
“We have requested the government to raise the limit. In the case of guaranteed pensions, the government has to make budgetary proposals. If the pension amount is increased, the funding must also be increased.
The promise has to be backed by actual money. So, we have sent a proposal to increase the limit, as the current amount may not retain the same value after 20 years,” PFRDA Chairman Deepak Mohanty had told Business Standard in September last year. Currently administered by the PFRDA, the pension scheme, launched in June 2015, aims to cover the vast unorganised sector (approximately 450 million people).
Such workers don’t receive social security benefits, such as pension or health insurance.
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APY subscribers, contributing between the ages of 18 and 40 years, receive a minimum guaranteed pension of Rs 1,000, Rs 2,000, Rs 3,000, Rs 4,000, or Rs 5,000 per month upon reaching the age of 60, depending on their contributions for the chosen pension amount.
For instance, for a minimum pension of Rs 1,000, a person joining at the age of 18 years has to deposit Rs 42 per month. For a minimum pension of Rs 5,000, the same person has to deposit Rs 210 per month. The benefit of minimum pension is guaranteed by the government, as it contributes 50 per cent of the contribution amount, or Rs 1,000 per annum, whichever is lower, for a period of five years.
As on January 6, APY has over 53 million subscribers and Rs 33,056 crore in assets under management.