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.

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