The Pension Fund Regulatory and Development Authority (PFRDA) has written to the government, requesting an increase in the guaranteed pension amount under Atal Pension Yojana (APY). The current amount may not be attractive enough for potential subscribers to enrol in the scheme.
“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. That’s the feedback we have received,” said PFRDA Chairman Deepak Mohanty in an interview with Business Standard.
Administered by the PFRDA, the APY is a contributory scheme aimed at establishing a universal social security system for workers in the unorganised sector.
Currently, subscribers who contribute between the ages of 18 and 40 years receive a fixed pension amount ranging from Rs 1,000 to Rs 5,000 after reaching the age of 60. As of September 16, APY has 50 million subscribers and Rs 30,694 crore in assets under management (AUM).
Mohanty also expressed optimism that the number of subscribers under APY is projected to increase by 13 million by the end of 2023-24, up from 12 million in 2022-23. The combined AUM of APY and National Pension System (NPS) may reach Rs 12 trillion by the end of March 2024, up from Rs 10.22 trillion as of September 16.
“While the subscriber base is expanded by APY, the corpus fund is driven by NPS. Also, PFRDA is taking steps to bring more corporations and individual citizens on board. This year, we expect 1.3 million new subscribers from both corporates and all citizen categories as well, up from 1 million last year,” he said.
Mohanty stated that in addition to APY, the NPS is also an attractive option for people in the unorganised sector because they can make annual payments and are not required to contribute monthly.
“Many households in rural areas and the unorganised sector have irregular income throughout the year. For them, NPS, with its flexible contributory regime, is more attractive,” Mohanty added.
Furthermore, Mohanty confirmed that the pension fund regulator will subscribe to the 50-year sovereign bond announced by the finance ministry on Tuesday.
“Since PFRDA can invest in government securities, we will be subscribing to the 50-year sovereign bonds. Also, we will be investing in sovereign green bonds as well. Last year, we invested close to Rs 312 crore in them,” he added.
Mohanty also confirmed that the Systematic Lump Sum Withdrawal (SLW) facility has been operationalised, allowing NPS subscribers to systematically withdraw their NPS corpus after retirement at monthly, quarterly, half-yearly, and annual intervals.
“The SLW is expected to be implemented in the coming month of October,” he added.
Mohanty expressed optimism that NPS assets will reach Rs 12 trillion by the end of March 2024. As of September 16, NPS’ AUM (including APY) stood at Rs 10.22 trillion, up 27 per cent year-on-year.
“PFRDA is taking steps to bring more corporations and individual citizens on board. This year we expect 1.3 million new subscribers from both corporates and all citizen categories. Last year, we added 1 million new subscribers,” he said.
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