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Finance Minister Nirmala Sitharaman on Tuesday justified more subscribers of Atal Pension Yojana (APY) in the lower slabs. She also reiterated that there is subsidy provision to ensure minimum return of 8 per cent.
The scheme, launched on May 9, 2015, has over 6.17 crore subscribers as on January 20, 2024. As per data provided by PFRDA, the total Assets Under Management (AUM) in the scheme is over ₹34,000 crore as on January 19, 2024. Three fund managers, under the scheme, have given return in the range of 9.58 per cent to 9.86 per cent.
Refuting the allegation made by senior Congress leader Jairam Ramesh, she said that majority of pension accounts being in the lower slabs, for a subsidised scheme intended for the poor and lower middle class, this is obvious. In fact, it shows the proper targeting of the scheme. “If the offtake was at the higher end, that would be surprising! The elitist mindset of the dynasty and its minions who are constantly thinking of people in the higher echelons of society, perhaps, blinds them to this obvious truth,” she said in a social media post while alleging that the Indian National Congress (INC) prefers that poor should not have pensions so that they are forced to rely on government hand-outs which keeps them dependant on dynasty politicians.
Earlier, quoting reports, Ramesh had said that nearly 83 per cent of the subscribers are in the lowest slab of ₹1,000 pensions, because the monthly contribution for it is low and it goes “unnoticed” by the beneficiaries. “For subscribers, the amount of return is not very attractive since it is a fixed income pension, which loses value with rising prices,” he said.
Responding to this, Sitharaman said that the minimum return under the APY is guaranteed by the Government to be at least 8 per cent, regardless of prevailing interest rates and returns. “This is an attractive guaranteed minimum return. Government pays a subsidy to PFRDA to make up for any shortfall in actual returns. If higher investment returns are received on the contributions of subscribers of APY, higher pension would be paid to the subscribers: In fact, currently the returns are more than 8 per cent,” she clarified.
Further she said that the scheme is designed based on best practice choice architecture to automatically continue the premium payment unless the subscriber opts out. “This is a deliberate and beneficial feature which is in the best interest of the subscribers. Instead of requiring people to decide each year to continue, they have to take a decision to discontinue,” she said.
“This makes many of them take the right decision and save for their retirement,” she explained. Richard Thaler (Nobel prize winner in Economics 2017) and Cass Sunstein (a Professor who worked in the Obama administration) are known for their book ‘Nudge’, which explains the need for proper ‘choice architecture’ in designing public schemes, she added.
A citizen in the age bracket of 18-40 years and having a savings bank account can take part in the scheme. Premium can be paid monthly/quarterly/six monthly. Monthly pension will be in the range of ₹1,000-₹5,000.
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