For people looking to invest for a fixed pension during their retirement, the guaranteed pension scheme of the government — Atal Pension Yojana (APY) — is an attractive option. The APY pension scheme is administered by the Pension Fund Regulatory and Development Authority (PFRDA) and is available to people aged 18 to 40 years.
It is a deferred pension scheme which means that one needs to keep contributing regularly till age 60 and, thereafter, a fixed amount of monthly pension will begin. This social security scheme was launched to provide them with a defined pension between Rs 1,000 to Rs 5,000, depending on the contribution and its period.
One thing that may stop people from subscribing to this Central Government’s flagship pension scheme is the notion that Rs 5000 is the maximum amount one can get as a monthly pension. However, this is not true. The maximum pension one can get under APY could be more than Rs 5000, but there is a condition. In order to get a pension of over Rs 5,000, the subscribers’ contribution should return more than the assumed return during the subscription period.
When someone joins the scheme, a minimum pension of Rs 1,000 or 2,000 or 3,000 or 4,000 or 5,000 is guaranteed on the basis of an assumed return. The contributions to APY are invested as per the PFRDA guidelines. If the actual return is more than the assumed return, then the subscriber would be eligible for the excess amount. In case the actual return is lower than the assumed return, the government will pay the balance amount to provide the guaranteed minimum pension……Read More>>