Atal Pension Yojana( APY) Subscriber Information for Indians

APY offers choice of minimum monthly pension guaranteed by Govt. of India of Rs. 1000, Rs 2000, Rs 3000, Rs 4000 and Rs. 5000 per month after 60 years of age.

Subscriber’s Age should be between 18 -40 yearsfor joining APY.

Subscribercan join APY through a bank branch/post-office.It is mandatory to provide nomination and spouse details in APY account.

Contributionscan be made on Monthly or Quarterly or Half yearly basisthrough auto debit facility from savings Bank account.

Transaction statementand PRAN Cardcan be viewed and printedanytime, from anywhere and free of cost by visiting www.npscra.nsdl.co.in>> Home>>Atal pension Yojana>> APY e-PRAN/Transaction statement view.

Subscriber can request for issuance of Physical PRAN card after paying the requisite sum at the website-https://enps.nsdl.com/eNPS/APYRePrintPRAN.html>>Atal Pension Yojana>>Print APY PRAN Card, After enrolling into Atal Pension Yojana, Physical transaction statement will be sent once in a year to the registered addressi.e. the address provided by a subscriber after enrolling for Atal Pension Yojana.Contribution Under APY.

All the queries regarding APY account / contribution shouldbe made to the APY-SP branchonly. Information about the status of contributions will be communicatedby CRA-NSDLthrough periodic SMS alertson registered mobile numberof the subscriber. Modification of Subscriber Details under APY, Subscriber  will  have  to makeawritten  request which is  to  be  submitted  to  the  APY-SP  branchalong  with  the  required  documents for modificationof  personal information like address, phone number, etc.

Switching facility is available once in a year during the month of April for which a “Form to upgrade/downgrade pension amount under APY” available at https://www.npscra.nsdl.co.in/>>Home>>Atal  Pension  Yojana>>Forms>>Maintenance>>  Forms  to  upgrade/downgrade  pension  amount  under  APY,is  to  be submitted to APY-SP branch.

To upgradethe pension amount means toincreasethepension amountof a subscriberand to downgrade the pension amount means todecrease thepension amountof a subscriber.

Change in frequencyof contributione.g. from quarterly contribution to monthly contribution or from half yearly contribution to quarterly contribution etc. may be done after submission of written request by the APY subscriber to the APY-SP branch.Exit from APY

Pre-matureexit(Exit before 60 Years of age):For closure of APY accounts a duly filled “Account Closure Form (Voluntary Exit) form” and other relevant documents is  to  be  submitted  to  the  concerned  APY-SP  branch.

The  form  is  available  at: www.npscra.nsdl.co.in>>Home>>AtalPension  Yojana>>Forms>>Withdrawal Form>>Voluntary exit APY withdrawal form. It will also be available at APY-SP branch as well.Subscriber should not close the savings bank account linked with APY account even though the APY account gets closed because the closure proceeds which the subscriber will receive on the pre-mature exit is transferred into the APY linked savings bank account and closure of this account may create problem in transfer of closure proceeds.

Exit due to Death:The claimant may submit the duly filled “APY Closure Form (Death)” along withacopy of the death certificate to the concerned APY-SP branch. The  form  is  available  at: www.npscra.nsdl.co.in>>Home>>AtalPension  Yojana>>Forms>>Withdrawal  Form>>APY  death  form.  It  will  also  be  available  at  APY-SP Branch as well.

On death of the APY account subscriber, the monthly guaranteed pension shall be payable to the spouseof the subscriberand in the absence or subsequent death of the spouse, thepension corpusas per the pension plan subscribedshall be payable to the nominee of the subscriber.The nominee has to be someone else other than the spouse of the subscriber.

On death of the subscriberbefore 60 years, spouse has the option to continue thecontribution in theAPY account of subscriber, which can be maintained in the spouse’s name,for the remaining vesting time, till the time original subscriber would have attained 60 years of age.APY Mobile Application.

APY mobile applicationis  available  for  APY  usersfree  of  cost, where,recent  5  contributions  can  be  checked  and  transaction  statement  and  e-PRAN  canalsobe downloadedanytime without paying any charge. Android users can download APY mobile application from Google play store by typing ‘APY and NPS Lite’ in search option.Raising Grievance Under APY.

Subscriber can anytimeraise grievancefree of cost and from anywhere byvisiting:www.npscra.nsdl.co.in>>Home >> select: NPS-Lite

Subscriberraising the grievance willbe allotted atoken numberagainst the grievance raised. Subscribermay check the status of the grievance under “Check the status of Grievance / Enquiry already registered”

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PFRDA relaxes NPS exit rules on medical expenses

The Pension Fund Regulatory and Development Authority (PFRDA) has relaxed the exit rules under National Pension System (NPS) on medical grounds for the government employees, subscribers under All Citizen model, corporate model, NPS-Lite and Swavalamban subscribers.

The exit under the NPS is governed by the rules as per the Pension Fund Regulatory and Development Authority (Exits and Withdrawals under the National Pension System) Regulations, 2015, which is amended from time to time.

PFRDA has issued a gazette notification relaxing exit guidelines on medical ground, called the Pension Fund Regulatory and Development Authority (Exits and Withdrawals under the National Pension System) (Third Amendment) Regulations, 2018.

Government sector subscribers
The exit from NPS for government sector subscribers will be allowed if the employer certifies that the subscriber has been discharged from the services of the concerned office on ..account of invalidation or disability.

Citizens, including corporate sector subscribers

The exit from NPS by citizens, including corporate sector subscribers will be allowed if the subscriber is physically incapacitated or has suffered a bodily disability leading to his incapability to continue with his individual pension account under National Pension System.

In such cases, the exit is allowed subject to the subscriber submitting a disability certificate from a Government surgeon or Doctor (treating such disability or invalidation of subscriber) stating the nature and extent of disability and also certifying that:

a) The subscriber shall not be in a position to perform his regular duties and there is a real possibility of the affected subscriber, being not able to work for the remaining period of his life.; and

b) Percentage of disability is more than seventy five percent in the opinion of such Government surgeon or doctor (treating such disability or invalidation of subscriber)

NPS-Lite and Swavalamban subscribers

The exit from National Pension System by NPS-Lite and Swavalamban subscribers is allowed provided that a subscriber who is physically incapacitated or has suffered a bodily disability leading to his incapability to continue with his individual pension account under National Pension System.

The exit in such cases shall be subject to the subscriber submitting a disability certificate from a Government surgeon or doctor (treating such disability or invalidation of subscriber) stating the nature and extent of disability and also certifying that:

a) The subscriber shall not be in a position to perform his regular duties and there is a real possibility of the affected subscriber, being not able to work for the remaining period of his life.; and

b) Percentage of disability is more than seventy-five percent in the opinion of such Government surgeon or doctor (treating such disability or invalidation of subscriber).

Partial withdrawals

Further, a subscriber is already permitted to withdraw not more than 25 percent of one's own contribution after being a subscriber for at least ten years in NPS for specific needs such as higher education, home purchase, marriage or critical illness needs. The new rule allows such partial withdrawals to meet medical and incidental expenses arising out of the disability or incapacitation suffered by the subscriber. In case of disability, one can partially withdraw even without exiting.

//economictimes.indiatimes.com/articleshow/62792368.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

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Swavalamban subscribers of micro-pension scheme can switch to APY: PFRDA

MUMBAI: Subscribers of micro-pension scheme 'Swavalamban', which closes tomorrow, can switch to the 'Atal pension Yojana' (APY) and retain the government's co-contribution, a PFRDA official said today.

'Swavalamban' scheme, which was launched by the UPA government in 2010-11, is a government-backed micro-pension scheme aimed at the unorganised sector and applicable to those who joined the National Pension Scheme (NPS).

Under the scheme, the government contributes Rs 1,000 per year to each NPS account for the first four years.

"However, this co-contribution of Rs 1,000 per annum by the government will not be there for the subscribers of both micro-pension schemes 'Swavalamban' and NPS Lite, which have together got 44 lakh subscribers under their fold and total assets under management of Rs 2,083 crore at present, from April 1 onwards," a senior official of the Pension Fund Regulatory and Development Authority (PFRDA) told PTI.

"This 'Swavalamban' scheme has been replaced with APY which was launched in June last year and hence we are not accepting any fresh subscription under 'Swavalamban' scheme since then.

"PFRDA is offering to continue the government's co-contribution of Rs 1,000 per annum for next three years to all those 'Swavalamban' subscribers who opt to shift to APY from April 1," the official added.

Unlike 'Swavalamban', which was open to all those working in the unorganised sector, APY is applicable only to workers in the age group of 18-40 years.

APY has around 22 lakh subscribers and assets under management of Rs 492 crore.

Pension fund managers believe that the replacement of 'Swavalamban' scheme with APY will help them do more business.

"We at SBI Pension Funds do hope to see a similar or even better business growth due to PFRDA's decision to replace 'Swavalamban' scheme with APY in future," SBI Pension Funds' Chief Executive Shailendra Kumar said.

http://economictimes.indiatimes.com/articleshow/51619196.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

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NPS shoot up 50% to Rs.1,07,802 crore as on December-end 2015

Thanks to the introduction of the Atal Pension Yojana, the National Pension System has seen a 43 per cent year-on-year jump in the number of subscribers to 1.13 crore as of December-end 2015, from about 79 lakh as of December-end 2014.

Increasing awareness among individuals about the need for financial security and stability during old age via pension has also seen the assets under management (AUM) of NPS shoot up 50 per cent to ₹1,07,802 crore as on December-end 2015 from about ₹72,000 crore as on December-end 2014.

The Atal Pension Yojana (APY) was launched on May 9, 2015 as a retirement savings product for the unorganised sector under the aegis of the National Pension System (NPS). Up to December-end 2015, about 18 lakh subscribers joined APY and their contributions amounted to ₹262 crore, according to Finance Ministry data. Under the APY, subscribers will receive a guaranteed minimum pension, ranging from ₹1,000 to ₹5,000 a month, at the age of 60, depending on their contributions, which itself would be based on the age of joining the scheme.

Minimum age

The minimum age for joining the APY is 18 years and maximum age is 40 years. Therefore, minimum period of contribution by any subscriber under APY would be 20 years or more.

The NPS has five schemes — three meant for employees of the Central government, State government, and private sector; NPS-Lite (meant for the poor and unorganised class of citizens); and APY.

As of December-end 2015, the AUM under the Central government (NPS has been made mandatory for all new recruits to the government — except armed forces — with effect from January 1, 2004) and State government categories accounted for about 90 per cent of the overall corpus of ₹1,07,802 crore. The AUM under the private sector and NPS-Lite categories stood at ₹8,887 crore and ₹1,988 crore, respectively. The NPS is a voluntary, defined contribution retirement savings scheme designed to enable the subscribers to make optimum decisions regarding their future through systematic savings during their working life.

Under the NPS, individual savings are pooled into a pension fund. These funds are invested by the Pension Fund Regulatory and Development Authority (PFRDA) regulated professional fund managers as per the approved investment guidelines into a diversified portfolio comprising government bonds, bills, corporate debentures and shares. These contributions would grow and accumulate over the years, depending on the returns earned on the investment made.

At the time of normal exit from NPS, the subscribers can use the accumulated pension wealth under the scheme to purchase a life annuity from a PFRDA empanelled life insurance company, apart from withdrawing a part of the accumulated pension wealth as lump-sum.

http://www.thehindubusinessline.com/money-and-banking/aum-under-national-pension-system-rises-50-to-over-1-lakh-cr-in-dec-15/article8586294.ece

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Atal Pension Yojana eligible for tax benefits as National Pension System

Contributions to the Atal Pension Yojana (APY) will now be eligible for the same tax benefits as the National Pension System (NPS), according to a circular released by the Income Tax department on Tuesday. The tax benefits include the additional deduction of Rs 50,000 under section 80CCD(1) introduced in last year's budget.

The APY is open to Indians aged between 18 and 40 years and has a minimum tenure of 20 years. Nearly 20 lakh subscribers have joined the scheme since its launch in June 2015. The APY replaced the NPS Lite or Swavalamban scheme, which got about 45 lakh subscribers in the past six years.

The biggest draw of the APY is that the government will contribute 50% of the contribution made by the investor for a period of five years. But this benefit will only go to subscribers who put in less than Rs 1,000 a year and those who join the scheme before 31 March 2016. Those with taxable income are also not eligible.

Most subscribers to the APY are small-ticket investors. Its AUM of Rs 328 crore is spread across 19.77 lakh accounts, so the average balance per account is only Rs 1,640. In comparison, the NPS Lite, which benefited from the market rally since 2010, has about Rs 1,982 crore lying in 44.63 lakh accounts, an average of Rs 4,440 per account.

http://economictimes.indiatimes.com/wealth/invest/atal-pension-yojana-eligible-for-same-tax-benefits-as-national-pension-system/articleshow/51108260.cms

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The finance ministry is examining a proposal by the PFRDA to exempt NPS withdrawals from payment of tax

The finance ministry is examining a proposal by the Pension Fund Regulatory and Development Authority (PFRDA) to exempt national pension system (NPS) withdrawals from payment of tax, so as to bring it on par with the employee provident fund (EPF) scheme.

This will provide a level-playing field for the two pension schemes.

"We have made a proposal to the finance minister ahead of the Budget, where exemption of NPS withdrawals from tax is one of the key recommendations. It will be a game-changer for NPS resulting in a substantial increase in the assets under management with more private subscribers coming on board," said a PFRDA official.

The Seventh Pay Commission had also recommended an exempt-exempt-exempt (EEE) status for NPS, to bring it on a par with the EPF scheme in terms of tax-free withdrawals.

The pay panel also pitched for extension of co-contribution incentive by the government beyond 31 December to attract subscribers under Atal Pension Yojana

The government has so far got over one million subscribers on board

Currently, the EPF withdrawals after five years of completion of service are tax-exempt, while premature withdrawals before five years attracts tax ranging between 10 per cent and 34.608 per cent, barring exceptions.

The EPF enjoys 'EEE' status, while NPS accounts have exempt-exempt-taxed status, where any contributions to the schemes and its earnings are not taxed but amount received on withdrawal is taxed.

"There is indeed a case to provide EEE status to NPS, but the matter is still under examination," said a government official.

The finance minister had in his last budget provided employees the option of choosing between EPS and NPS, and a cabinet note for amendment of EPF and MP Act, 1952, has been sent to the law ministry for vetting.

Also, while the Employees' Provident Fund Organisation has been giving a return of 8.25-9.5 per cent to its subscribers, NPS has given a return of 9.2 per cent and NPS Lite has given a compounded annual growth return of 9.68 per cent.

Of the over Rs1,00,000 crore assets under management of NPS, 90 per cent falls under the central and state government schemes.

Meanwhile, the APY scheme got over one million subscribers on board by December. APY guarantees subscribers a monthly pension of Rs1,000, Rs2,000, Rs3,000, Rs4,000, or Rs5,000 in return for the contribution varying from Rs42 to Rs210 per month.

Under the scheme, the government contributes 50 per cent of the subscriber's contribution or Rs1,000 per annum, whichever is lower, to each eligible subscriber account for five years to 2019-20, who joined the NPS before 31 December 2015 and who are not income taxpayers.

Currently, eight pension fund managers manage private-sector funds and only three run by state-owned financial institutions are allowed to manage central and state government funds.

SBI Pension Funds, UTI Retirement Solutions, and LIC Pension Fund manage the government corpus. They also manage the private-sector corpus along with ICICI Prudential Pension Fund Management, Kotak Mahindra Pension Fund, HDFC Pension Management, Reliance Capital Pension Fund and the pension fund incorporated by Birla Sun Life Insurance.

http://www.domain-b.com/finance/general/20160108_exemption.html

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NPS to submit applications online for settlement of withdrawal claims from April 1: PFRDA

Pension fund regulator PFRDA has made it mandatory for the subscribers of New Pension System (NPS) to submit applications online for settlement of withdrawal claims from April 1 next year.

According to a PFRDA directive, no request in physical form would be entertained with effect from April 1, 2016.

"It has...Been decided that with effect from April 1, 2016 only such withdrawal requests raised on online platform will be accepted at CRA (Central Recordkeeping Agency) system for further processing.

"Physical withdrawal request forms received at CRA will not be accepted for further processing," the Pension Fund Regulatory and Development Authority said.

NSDL is the CRA for the NPS. A subscriber can exit NPS due to superannuation, premature exit and death.

PFRDA said it is committed to support the 'Digital India' campaign of the government and efforts were being made to make various NPS related services available on online platform.

Making withdrawal process online wherein subscribers can raise withdrawal request using online platform is one of the such initiatives, it said.

"This will make withdrawal process paperless to a great extent and seamless and exit claims of the subscribers can be settled in least possible time," it said.

NPS has been implemented for all government employees (except armed forces) joining Central Government on or after January 1, 2004.

Most of the State/UT Governments have also notified the NPS for their new employees. NPS has been made available to every Indian Citizen from May 2009 on a voluntary basis.

Further, from June 2015, the Atal Pension Yojana (APY), has been launched which has given the much required impetus to the social security schemes.

NPS and APY together have more than one crore subscribers with total Asset Under Management of more than Rs 1 lakh crore.

Meanwhile the retirement fund body EPFO is also in the process of providing facility of filing PF withdrawal claims online with an ultimate aim to process such applications with 24 hours of receiving it.

http://www.business-standard.com/article/pti-stories/apply-online-for-nps-withdrawals-from-april-next-pfrda-115112200197_1.html

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National Pension System (NPS) has soared to Rs 90,327 crore with the 1.15 crore subscribers

The total corpus of National Pension System (NPS) has soared to Rs 90,327 crore with the contribution of nearly 1.15 crore subscribers, the Finance Ministry said on Tuesday. The total assets under management (AUM) are worth Rs 1.09 lakh crore while AUM per subscriber on average is Rs 95,000, a finance ministry statement said. "NPS had 1.15 crore subscribers with a total corpus of Rs 90,327 crore as on January 23, 2016," it said.

NPS subscribers of central government are 14.1 percent of the total subscribers while that of the state governments are 24.9 percent. The number of NPS subscribers in the central government is 16.11 lakh with a total corpus of Rs 34,754 crore. State governments contribute Rs 45,486 crore to the corpus, from their 28.59 lakh subscribers. There are 4.48 lakh NPS subscribers in the corporate sector and 1.28 lakh in the unorganised sector. The number of subscribers under Atal Pension Yojana (APY) 19.48 lakh. The pension fund regulatory body (PFRDA) completed two years of its statutory status on February 1, 2016 and to mark this occasion, it is observing NPS Service Week from February 1-6.

During the NPS Service Week, PFRDA will create awareness about the scheme, take efforts to reduce subscribers' grievances, update subscriber details and advise subscribers regarding benefits associated with Permanent Retirement Account among others. The Pension Fund Regulatory and Development Authority (PFRDA) will also organise a Pension Conclave on February 4.

http://www.moneycontrol.com/news/economy/nps-corpus-swells-to-rs-90327-cr115-cr-subscribers_5266501.html

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The new e-NPS facility PFRDA has launched e-NPS pensions

New Delhi: You can now opt for the National Pension System (NPS) from the comfort of your home.

Pension regulator PFRDA has launched e-NPS, a convenient online based subscriber registration and contribution facility for NPS.

The new e-NPS facility is a Permanent Account Number (PAN) (income tax) based initiative that has recently gone live, Hemant Contractor, PFRDA Chairman told Business Line.

He also said that PFRDA has abandoned the earlier proposal of introducing Aadhar-based e-NPS facility.

"The initiative we have now launched is only IT-PAN based one. Any person with an IT PAN card and a bank account could subscribe for NPS online. We will validate the PAN details online with the income tax department".

Banks will provide online verification of know-your-customer (KYC) for the customers of their banks willing to open NPS account online.

As on date, ten banks –Allahabad Bank, Bank of India, Bank of Maharashtra, Oriental Bank of Commerce, South Indian Bank, State Bank of Travancore, State Bank of Hyderabad, State Bank of Patiala, TamilNadu Mercantile Bank and United Bank of India have provided the facility of online KYC verification.

PFRDA has advised all other bank point of presence (POP) to join the e-NPS platform and provide online verification of KYC.

The launch of e-NPS would also mean subscribers need not visit any point of presence and could register from anywhere through an internet connection.

http://www.thehindubusinessline.com/money-and-banking/pension-regulator-pfrda-launches-enps/article8077847.ece

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District lags much behind in Atal Pension Scheme

The Pradhan Mantri Atal Pension Scheme has received only 1,279 applications so far mainly because of the apathy of the implementing agencies and scheme's failure to convince the potential beneficiaries. Though the installment is very low, very few people have participated in it.

As per the figures shared by the district lead bank, Bank of India, 608 applications from rural areas have received for the scheme while 671 from urban areas. Out of 1,279 as many as 1,261 bank accounts attached for the scheme are from public sector banks.

Compared to the pension scheme, there are more applicants for Prime Minister Suraksha Bima Yojana and Prime Minister Jivan Jyoti Bima Yojana in the district. Both the schemes have received 1,45,474 and 1,48,063 applications so far.

M G Kulkarni, general manager of lead district bank, Bank of India said, "It is challenge for us to convince the people about importance of the pension scheme. People are aware of the pension schemes up to some extent but still there is little response from the people for it. We are working out some plans to increase its reach-out."

Sources close to the development said that the planning of the scheme has some problems. The maximum pension offered in the scheme is Rs 5,000 per month. Even if someone is in his or her 30s and pay higher amount as installment to get Rs 5,000 per month pension; nobody is sure that after 20 years what value Rs 5,000 will have in the market. Unfortunately, no senior government official comes out and addresses this basic and pin-pointed question about the pension scheme, said the official on the condition of anonymity.

Sujit Minchekar, Shiv Sena MLA from Kolhapur district said that the government officials need to take extra efforts so that some people can participate in the scheme. Getting some pension after turning 60 is necessary and some people will benefit for sure. But there has to be more efforts than regular ways of issuing media releases and distributing leaflets. The real beneficiaries of the scheme are people from unorganized sectors working in urban areas as well as some small scale industries, he said.

http://timesofindia.indiatimes.com/city/kolhapur/District-lags-much-behind-in-Atal-Pension-Scheme/articleshow/48832120.cms

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Centre releases Rs 2,000 crore for pension scheme

This is in addition to the Rs 250 crore contributed by the central government as grant-in-aid for providing minimum pension of Rs 1,000 to the pensioners of Employees' Pension Scheme, 1995.

The union government has released Rs 2,000 crore to the Employees' Pension Scheme as its contribution for the year 2015-16, Minister of State for Labour and Employment Bandaru Dattatreya said on Monday.

This is in addition to the Rs 250 crore contributed by the central government as grant-in-aid for providing minimum pension of Rs 1,000 to the pensioners of Employees' Pension Scheme, 1995, the minister said in a statement.

The minimum pension for the EPS pensioners was increased to Rs 1,000 per month in September last year.

It is necessary to infuse additional amount by the central government to sustain the continuance of the minimum pension, the statement added.

The contribution of central government is calculated at the rate of 1.16 percent of the monthly wages of the members contributing to the scheme.

This is in addition to the funding by the employers covered under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, contributing 8.33 percent of the monthly wages of the members of the scheme.

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Banks to calculate, disburse 6 % dearness relief to pensioners

New Delhi, All pension disbursing authorities including nationalised banks have been asked to calculate the quantum of dearness relief payable to pensioners, after the recent six per cent increase in it by the government.

The move comes following a decision by the Union Cabinet early this month regarding six per cent hike (from existing 113 to 119 per cent) in dearness allowance (DA) to central government employees and dearness relief (DR) to pensioners with effect from July 1, 2015.  With the increase, central government employees and pensioners will get 119 per cent of DA and DR, respectively.

"It will be the responsibility of the pension disbursing authorities, including the nationalised banks, etc.
to calculate the quantum of DR payable in each individual case," an order issued today by the Ministry of Personnel, Public Grievances and Pensions said.

In the case of retired Judges of the Supreme Court and High Courts, necessary orders will be issued by the Department of Justice separately, it said.

The offices of Accountant General and authorised pension disbursing banks are requested to arrange payment of relief to pensioners etc.

Without waiting for any further instructions from the Comptroller and Auditor General of India and the Reserve Bank of India, the order said.

There are about 50 lakh central government employees and 56 lakh pensioners.

http://news.niticentral.com/2015/09/28/banks-to-calculate-disburse-6-dearness-relief-to-pensioners/

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APY the subscriber may actually be getting a sub optimal return

In the recent budget, the Finance Minister announced the Atal Pension Yojana, which promises a fixed pension of at least Rs.1,000 at age 60 if subscribers contribute pre-defined amounts over their working life. The APY suffers from five problems.

1. Clarity of objective

The NPS-Swavalamban (NPS-S) has been the flagship pension scheme for the informal sector since 2010. While it has taken root over the last few years, problems in the design and process of the scheme persist. The APY seems to be motivated by these concerns. The scheme document says: `… coverage under Swavalamban Scheme is inadequate mainly due to lack of clarity of pension benefits at the age after 60. The Finance Minister has, therefore, announced a new initiative called Atal Pension Yojana (APY) in his Budget Speech for 2015-16′. Clarity of pension benefits could be interpreted as clarity of process for receipt of benefits, or certainty about the amount of benefit. The exact interpretation has not been made clear. It seems that the intent of the government is to migrate the entire existing NPS-S to the APY [See Page 7 of the APY FAQs]. It is not clear that this is the right approach. A careful examination of the lessons obtained from NPS-S over the last four years (e.g. Sane and Thomas, 2015) would have helped design a better response. Perhaps there was a role for co-contribution separately from the pension guarantee.

2. Design of the procedure

There is considerable confusion on how the APY is actually going to work. Initially, the APY was to be sold through the same aggregators that distribute the (NPS-S). New documentation indicates that it is actually only open to bank account holders. All the existing NPS-S customers are to be migrated to the APY with an option to opt-out. Does this place the responsibility of opening bank accounts for NPS-S customers on the aggregators? What happens to those who wish to continue with the NPS-Lite i.e. use the NPS without the co-contributions? In that case, the PFRDA ought to define well-defined standards of skill and care that aggregators will be expected to exercise towards a customer as invariably the aggregator will end up playing the role of an advisor when making a decision on whether to opt-out of the APY, or continue only the APY or continue the APY along with NPS-Lite.

The scheme levies penalties on those who are not able to maintain the required balance in the savings bank account for contribution on the specified date and close bank accounts if contributions are not paid for 24 months. However, we know from the NPS-S experience that informal sector workers often do not have liquidity, are not able to contribute on time, but do come back over subsequent periods. This design of the APY will invariably exclude those who cannot maintain a balance in their savings bank accounts or make regular contributions, defeating the purpose of providing a formal sector savings mechanism.

3. Price of the guarantee

Apparently innocent guarantees can prove to be disastrously costly when viewed in their entirety (e.g. Shah, 2003). The APY seems to be motivated by the desire of the government to ensure that on contributing continuously, a member gets at least a pension of Rs.1,000. While not explicitly specified, the APY seems like a minimum return guarantee which will ensure that accumulated savings at retirement do not fall below a certain value. There are different kinds of guarantees, and several ways to design minimum return guarantees. For example, an absolute rate of return guarantee promises a pre-specified rate of return, while a relative rate of return guarantee promises a return close to the average of all funds. The motivation for the choice of this particular design, and the calculations that influenced the choice have not been articulated. Under the APY the subscriber may actually be getting a sub optimal return. This is not surprising, as all guarantees come at a cost (Pennacchi, 1999). However, policy makers need to show the application of mind: the class of guarantees which was evaluated, and the logic that led up to this choice. The contributions under APY are to be invested as per the investment guidelines prescribed by Ministry of Finance, Government of India. The investment guidelines, and how they would finance the guarantee of the APY are not yet clear.

4. Safeguards against arbitrary increases

Almost all pension guarantees in the world have turned into fiscal problems. Even if a guarantee is fiscally sound at the outset, modifications to the program design later on render it bankrupt. Governments are tempted to increase benefits prior to an election. Apparently innocuous changes are announced, which add up to many percentage points of GDP. Any guarantee program requires an elaborate array of safeguards to protect against reckless actions in the future. The APY features no safeguards. It does not require governments to show actuarial calculations before any changes to the design are introduced. An example of a defined benefit guaranteed return plan running into funding difficulties is the Employees Pension Scheme (EPS). Estimates suggest that the EPS is facing a shortfall of Rs.54,000 crore, and several changes in scheme design have now been put in place owing to these funding difficulties.

5. Improper process

Indian finance has taken a big step forward by committing to the Handbook on adoption of governance enhancing and non-legislative elements of the draft Indian Financial Code. The procedural requirements in the Handbook, for framing regulations include a statement of objectives and a cost benefit analysis of each of the provisions. Many of the mistakes of the APY could have been avoided by the use of this process. It is not too late to apply this process to APY, even now.

http://www.marketexpress.in/2015/05/concerns-about-atal-pension-yojana.html

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India aims to created under Pradhan Mantri Jan Dhan Yojana to extend insurance

The Government of India is joining the UN-based Better Than Cash Alliance. The announcement comes on the First Anniversary of the Prime Minister  Narendra Modi’s flagship financial inclusion programme Pradhan Mantri Jan-Dhan Yojana (PMJDY).

Under PMJDY, in one year, about 180 million new accounts have been opened, with deposits totaling more than $3.4 billion (223 billion Rupees).

The new partnership with the Better Than Cash Alliance, made up of Governments, companies, and international organizations, is an extension of Indian Government’s commitment to reduce cash in its economy. Digital financial services lower the cost of providing financial services and make it more convenient for poor people to access their accounts.

The Union Finance Minister of India Arun Jaitley said: “The scale of ambition of Pradhan Mantri Jan-Dhan Yojana has been much higher than for any other financial inclusion initiative in the past. The project has been instrumental in bringing almost all families of the country into the formal financial system and enabling citizens at grassroots level to perform financial transactions and keep their hard-earned money safe.”

India’s announcement comes ahead of next month’s United Nations Special Summit in New York, when Prime Minister Shri Narendra Modi and other world leaders will launch the adopted Sustainable Development Goals (SDGs). Digital financial services are a key tool for the implementation of the goals, and advocates hope India’s leadership inspires other governments to harness the power of digital payments as a strategy for achieving the SDGs.

Dr. Ruth Goodwin-Groen, Managing Director of the Better Than Cash Alliance said that India’s leadership and progress are inspirational for countries around the world. He said that by making the digitization of payments to achieve financial inclusion a top priority, the Indian Government is showing its commitment to improving the lives of its people and driving inclusive growth.

One year ago, the Government of India had announced PMJDY with a goal of covering every household with a bank account in less than five months’ time. The programme focuses on citizens excluded from the formal financial sector, including women, small farmers, and labourers. To ensure that these accounts are actively used, the Government is delivering financial products, such as credit for economic activity, as well as remittance facilities, insurance, and pension directly into the accounts.

The Union Finance Minister of India Shri Arun Jaitley said “We have been recognized by the Guinness World Records for opening over 1.8 crore (10 million) bank accounts in a single week. As a next step, the aim is to utilize these accounts for extending insurance, pension, and credit facilities to those who are currently excluded from these benefits.”

Dr. Hasmukh Adhia, then Secretary, Department of Financial Services, Ministry of Finance, Government of India, said: “PMJDY has been a game changer in the country’s financial inclusion efforts. The initiative has demonstrated that when we converge the efforts of all stakeholders, and work in unison with clearly defined goals, unprecedented results follow.”

The financial inclusion programme, along with Aaadhar biometric Unique Identity cards that make it easier for the Government to identify social benefit recipients and the widespread use of mobile phones, are driving financial inclusion in India. It is also resulting in cost savings. The fuel subsidy programme, which is the world’s largest cash transfer programme, saved $2 billion (131 billion Rupees) by paying cooking gas consumers directly into their bank accounts, according to a new paper by Columbia University.

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Atal Pension Yojana (APY) has been modified to make it more acceptable

Pension scheme Atal Pension Yojana (APY) has been modified to make it more viable and acceptable for informal sector workers with intermittent incomes, an official statement said on Thursday.

The provision of mandatory monthly contributions and penal provisions for non-contribution towards the scheme by subscribers have been removed and the new rules allow individual subscribers to make monthly, quarterly or half yearly contributions instead, a finance ministry statement said.

The discontinuation of monetary contribution towards the pension scheme has been greatly modified in favour of the subscriber, while any account will not be deactivated and closed until the account balance with self-contributions minus the government's co-contributions becomes zero due to deduction of account maintenance charges and fees, the statement added.

Penalty for delayed payment has been simplified to Re.1 per month for a contribution of Rs.100, and the earlier practice of levying different penalties for different slabs has been done away with.

Premature exit from the scheme before 60 years of age was not allowed except in the event of death of terminal illness but now a subscriber can voluntarily exit from the scheme and receive his contribution along with the interest earned on it after deduction of account maintenance charges, the statement said. However, the government's co-contribution along with the interest earned on it will not be paid.

Launched by Prime Minister Narendra Modi in Kolkata in May, APY aims to provide a minimum monthly guaranteed pension to subscribers ranging from Rs.1,000, Rs.2,000, Rs.3,000, Rs.4,000 or Rs.5,000.

http://www.business-standard.com/article/news-ians/atal-pension-yojana-made-more-attractive-115082000705_1.html

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India’s retired military men keep interest rates higher in Asia’s third-largest economy?

Will a new multi-billion dollar bill to take care of India’s retired military men keep interest rates higher in Asia’s third-largest economy?

Since New Delhi agreed over the weekend to demands from members of the military for a more generous pension scheme, analysts have aired doubts about the ability of the government to stick to its fiscal plans.

Any concern that the government is unable to stick to its fiscal targets could delay a lowering of interest rates and even a stronger economic recovery, analysts say, because it could convince Reserve Bank of India Governor Raghuram Rajan to put off any further easing.

Mr. Rajan is keeping New Delhi on a tight leash: he has said time and again that a healthy budget is a pre-condition to a more accommodative policy.

The government has in principle accepted what India has been calling the “One Rank One Pension” plan, a demand by defense personnel that the same pension should be paid to armed force retirees with the same rank and the same length of service, regardless of the year they retired.

The move is likely to add significantly on the fiscal bill: economists at HSBC estimate it will cost the country 160 billion rupees, or around $2.5 billion, in the year ending next March alone.

Unfortunately that’s not the only unexpected cost in the country’s books this year. Last month, the finance ministry announced it would be spending 170 billion rupees to recapitalize capital-starved public sector banks. Meanwhile the recent stock market weakness in India and around the world has made it unlikely India will be able to raise the revenues it had planned to pocket by selling stakes in government companies. That could leave another 340 billion rupee shortfall, HSBC estimates.

“All of this means that the path of fiscal consolidation has become harder,” HSBC chief India economist Pranjul Bhandari said in a note Monday.

Some positive factors – including a fall in India’s fuel and fertilizer subsidy bill on the back of falling commodity prices, expenditure reductions and a higher-than-expected dividend from the central bank – will help relieve the pressure for now. But the outlook for next year is less encouraging, economists warn.

India should be able to meet its target of keeping its fiscal deficit at 3.9% of gross domestic product this fiscal year. However if it wants to continue lowering that deficit as planned to 3.5% next year and 3.0% the year, India will need to cut costs and find new sources of revenues, said Nomura in a report Monday.

“Continued fiscal consolidation beyond FY16 will require structurally addressing both the expenditure (deregulating the remaining fuel and fertilizer prices) and revenue side (broaden the tax base) of the fiscal balance,” Nomura said.

Mr. Rajan will be watching closely.  He cut rates three times since the start of the year to the current level of 7.25%, the lowest level India has seen since May 2013.

In a recent interview with the Wall Street Journal he said that the RBI is still in “accommodative mode,” but he quickly added that the bank’s policy will be driven by upcoming news.

“We’re looking at the data to see what more room we have,” he said.


http://blogs.wsj.com/indiarealtime/2015/09/07/will-indias-new-military-pension-bill-derail-its-deficit-plans/

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APY Subscribers can make half-yearly, quarterly payments

To increase the subscription of the Atal Pension Yojana (APY) among informal sector workers and make the scheme more viable, the government has modified the flagship programme to give subscribers an option to make contributions on a monthly, quarterly or half-yearly basis, instead of only on a monthly basis earlier.

Also, the provision related to the discontinuation of payment of contribution has been substantially modified in favour of the subscriber, the finance ministry said in a statement on Thursday.

“The account will not be deactivated and closed till the account balance with self-contributions, minus the government co-contributions, becomes zero due to the deduction of account maintenance charges and fees,” it said.
Besides, the penalty on delayed payment has been simplified to just R1 per month for contribution of Rs 100, or part thereof, for each delayed monthly payment instead of different slabs given earlier.

Similarly, a premature exit from the scheme before 60 years of age was not permitted earlier except in exceptional circumstances, — in the event of the death of the beneficiary or terminal disease. Now the modified provision permits the subscriber to voluntarily exit with the condition that he shall only be refunded the contributions made by him to APY, along with the net actual interest earned on his contributions (after deducting the account maintenance charges).

The other condition enabling voluntary exit is that the government co-contribution, and the interest earned on the government co-contribution, shall not be returned to such subscribers.

The APY was launched by Prime Minister Narendra Modi on May 9.

http://www.financialexpress.com/article/industry/companies/apy-subscribers-can-make-half-yearly-quarterly-payments/122968/

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Pensions regulator PFRDA asks banks to process APY contributions quickly

Pensions regulator PFRDA has flayed banks for not adhering to timelines for processing contributions to recently launched Atal pension yojana (APY), which is among the key social security schemes launched by prime minister Narendra Modi in May.

The regulator has a daunting task of getting two crore subscribers for Atal pension yojana by this year end and as of now it has about five lakh subscribers enrolled. And tardy processing of contributions isn’t helping its cause much either. Pension Fund Regulatory and Development Authority (PFRDA) administers the scheme and the institutional architecture of NPS is being utilised to enroll subscribers under Atal pension yojana.

In June 2015, there were several instances where subscriber contributions were delayed. PFRDA has warned that any overdue interest or subscriber compensation due to delay in processing may have to be borne by the concerned bank.

Under the schemes’ rules, banks are required to collect additional amount for delayed payments, such amount will vary from minimum Rs. 1 per month to Rs 10 per month.

Banks get an incentive for mobilising new accounts under Atal pension yojana and for promotion and development of the scheme as well. Under this particular scheme, a minimum pension amount is guaranteed by the government on the premise that certain parametres are met as per the guidelines. This is why timely remittance of funds and investment are crucial.

“It was observed that during June 2015, there were several instances where these timelines were not adhered by the banks. It may be noted that the delayed upload of contribution had also an adverse impact by way of overdue interest or increased monthly contribution for the subscribers due to change of age during the period of delay,” PFRDA said.

For example, a guaranteed Rs 5,000 monthly pension for a 35-year-old will require monthly investment of Rs 902. However, if the subscriber turns 36 during the period of delay, he/she will have to pay Rs 990 per month. PFRDA directed all the banks to adopt measures that will "streamline the process of contribution upload as per timelines."

Banks are required to generate the Permanent Retirement Account Number (PRAN) immediately after submission of applications and the subscribers are to be provided with acknowledgment slip indicating the pension amount opted and PRAN.

PFRDA directed banks to upload files containing subscriber’s data and remittance of funds collected on the second day of PRAN generation. By the fourth day, contributions should be matched and booked and units need to be allotted.

http://www.mydigitalfc.com/news/pfrda-asks-banks-process-apy-contributions-quickly-554

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In July India's pension fund to start equity investments

NEW DELHI: Starting in July, India's state-run pension and social security fund will invest about $800 million in equities in the current fiscal year, labour minister Bandaru Dattatreya said, in a long-awaited move that may help finance an ambitious privatization programme.

The more than $100 billion Employees' Provident Fund Organisation (EPFO) intends to place an initial 1 per cent of its investments in exchange traded funds, increasing to 5 per cent of the annual total in equity products by March 31.

http://timesofindia.indiatimes.com/business/india-business/Indias-pension-fund-to-start-equity-investments-in-July/articleshow/47811959.cms

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PARRIKAR SAYS, GOOD NEWS ON ONE RANK, ONE PENSION SOON

Defence minister Manohar Parrikar on Thursday said that Army can expect ‘good news soon’ on the issue of one rank, one pension (OROP). In the city for cantonment board meeting, the minister said: “Our commitment to implement the OROP remains intact. I cleared the file as soon as it came to my notice.”

When asked whether the issue could be put before Parliament in the monsoon session starting July 21, the minister said that it was difficult to give a time frame, as many ministries and departments are involved in its implementation.

“Since issues like OROP involve more than one ministry, there cannot be any time-frame for its implementation. I do not put myself in restrictive time-frame. It will be implemented soon, but how soon, I cannot tell. My department followed the time-frame despite difficulties,” he said.

Ex-servicemen have been protesting since June 14 to press for the implementation of OROP. At present, pension of retired army personnel is based on the pay commission recommendations at the time of their retirement. This leads to difference in pension for officers of the same rank who retire on different dates.

With OROP, those who retired earlier will draw the same pension as officers and jawans of the same rank who are retiring now. They would also be entitled to a year’s back pension at the new rate, which would be a windfall for pensioners.

The system will benefit 25 lakh ex-servicemen, and is expected to cost the government around Rs 8,500 crore.

http://www.theindianpanorama.com/india/2015/good-news-on-one-rank-one-pension-soon-says-parrikar-43948.html

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