Atal Pension Scheme not to be limited to Rs 5,000 monthly benefit? Here's what PFRDA chairman says

PFRDA Chairman S Ramann said on Wednesday that the regulator has requested the finance ministry to raise the current ceiling under the Atal Pension scheme beyond Rs 5,000. Acknowledging that the current minimum fixed pension allowed under the APY (Atal Pension Yojana) scheme is inadequate, Ramann said that the decision to propose higher ceilings is based on feedback from rural population.

He also said that the feedback provides a signification dimension to review the scheme.

What PFRDA Chairman's remarks may mean for you

Currently, the Atal Pension scheme helps subscribers secure fixed monthly pension in multiples of Rs 1,000 with a threshold of Rs 5,000.

The official's comment indicates that the pension scheme may have additional guaranteed pension options going forward.

Atal Pension Yojana explained with examples

The scheme rewards subscribers entering the scheme at an early stage.

One can start investing money at the age of 18 and contribute until they are 60. Only people aged 18-40 are eligible to open an APY account.

For instance, starting at age 25, one is required to make monthly contributions of Rs 76, quarterly contributions of Rs 226 or half-yearly contributions of Rs 449 for a vesting period of 35 years in order to secure a Rs 1,000 monthly pension at maturity. In this example, the subscriber investors a total of Rs 31,920, Rs 31,640 or Rs 31,430 in monthly, quarterly and half-yearly options, respectively.

Similarly, starting 10 years later, higher contributions of Rs 181 (monthly), Rs 539 (quarterly) or Rs 1,068 (half-yearly) are required for 25 years (vesting period) to secure the same benefit. Here, the total investment amount stands at Rs 54,300, Rs 53,900 or Rs 53,400, respectively.

These examples indicate that delaying investment by 10 years in APY costs the subscriber about Rs 22,000 more to earn the same monthly pension of Rs 1,000 er month after turning 60.

Here's the Atal Pension Yojana chart, as per the Department of Financial Services' jansuraksha.gov.in portal:

Now, here's what your contribution will look like if you start investing in APY at age 25, as per the available information:

Rs 1,000 monthly pension

To get a Rs 1,000 pension, your monthly contribution should be Rs 76, or Rs 226 quarterly, or Rs 449 half yearly.

Rs 2,000 monthly pension

To get a Rs 2,000 pension, your monthly contribution should be Rs 151, Rs 450 quarterly, or Rs 891 half yearly.

Rs 3,000 monthly pension

To get a Rs 3,000 pension, your monthly contribution should be Rs 226, Rs 674 quarterly, or Rs 1,334 half yearly.

Rs 4,000 monthly pension

To get a Rs 4,000 pension, your monthly contribution should be Rs 301, or Rs 897 quarterly, or Rs 1,776 half yearly.

Rs 5,000 monthly pension

To get a Rs 5,000 pension, your monthly contribution should be Rs 376, Rs 1,121 quarterly, or Rs 2,219 half yearly.

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