New subscriptions beneath the Atal Pension Yojana (APY) have been on the rise even through the pandemic period thanks to a stepping up of the outreach programmes by the government and the Pension Fund Regulatory and Development Authority (PFRDA), but earnings deficiency appears to be forcing an rising quantity of workers to leave the scheme prematurely. While a record 79 lakh workers, largely from the unorganised-sector, joined the APY in FY21, even as the pandemic wreaked havoc, 10 lakh moved out of the scheme in the year, reflecting the earnings constraints faced by these low-wage earners.
In just the very first 5 months of the present fiscal year, 5.9 lakh people today opted out of the scheme, even though about 30 lakh joined. Those who opted out of the scheme had been 19.7% of the newly joined in April-August, FY22 as against 12.7% in FY21, 10.1% in FY20 and 6.4% in FY19.
APY is the government-backed, voluntary scheme meant to provide old-age earnings safety in the type of minimum assured pension (ranging from Rs 1,000-5,000/month), in proportion to person contributions, even as it is industry-linked. It types the bulk of the subscriber base beneath the fold of the New Pension System (NPS).
In a current interview to FE, PFRDA chairman Supratim Bandyopadhyay expressed self-confidence that the a record 1 crore would be added to NPS subscriber base in FY22, 90% of which beneath APY, thanks to the authority’s distribution partners — mostly banks and banking correspondents. The gross NPS subscriber base stood at 4.52 crore at the finish of August, 2021.
The PFRDA is expecting fresh NPS fund inflows of Rs 1.25 lakh crore in FY22, a development of 22% on year. Depending on industry situations, asset beneath management could see more than 30% development to someplace close to Rs 7.5 lakh crore in FY22, it reckons.
Gautam Bhardwaj, co-founder at pinBox Inclusion, a international pension technologies firm, stated that despite the fact that the boost in the coverage beneath APY has been creditable, by not paying sufficient focus to productive retirement literacy, a ‘false expectation’ about old-age earnings safety amongst reduced earnings men and women is getting produced. According to him, apart from earnings constraints, realisation of the inadequacy of the scheme’s advantage could possibly also be a purpose why people today had been opting out.
Quoting NSDL information, Bhardwaj stated 72% of the these subscribed the scheme, as on March 31, 2020, opted for the minimum Rs 1,000 per month pension scheme. Only 17% of the subscribers had opted for Rs 5,000 month-to-month pension. Under the APY, a subscriber, aged amongst 18-40 years, can opt for a minimum month-to-month pension ranging amongst Rs 1,000 and Rs 5,000. APY is not inflation-indexed, he noted.
Meanwhile, the government is taking into consideration combining APY with two common insurance coverage schemes – Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Suraksha Bima Yojana (PMSBY– in a move aimed at producing the scheme more desirable and to make certain superior coverage. Of course, a subscriber will have to contribute added amounts to avail herself of the accidental and life coverages.