Atal Pension Yojana (APY) has offered competitive returns of 9.1% since launch, according to Finance Minister Nirmala Sitharaman.

APY is a pension scheme designed to provide guaranteed financial security during retirement, targeting lower-income groups. The government guarantees a minimum pension to the subscriber under APY. If the actual returns on pension contributions fall short of the assumed returns for the minimum guaranteed pension, the government covers for the shortfall.

Conversely, if the actual returns exceed the assumed returns, the excess will be credited to subscriber’s account, offering enhanced benefits.

9.1% returns since inception!

Writing on X (formerly Twitter) on March 26, Sitharaman said the minimum return under the APY is guaranteed by the GoI to be at least 8%, regardless of prevailing interest rates and returns.

“This is an attractive guaranteed minimum return. GoI 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%,” she said while responding to one of her political opponent’s allegations.

According to the Finance Minister, APY has given a return of 9.1% since inception. She says that with APY, any additional money earned beyond the assured pension amount goes entirely to the person enrolled in the scheme.

“APY does give returns, and it has given 9.1% since inception, which is quite competitive even compared with other saving schemes. Any upside above assured pension is completely with the beneficiary,” the FM said.

Currently, there are 4.53 crore people subscribed to APY.

Sitharaman highlighted a feature of APY where the premium payment continues automatically unless the subscriber chooses to stop. This helps people save for retirement without having to make a yearly decision.

“Instead of requiring people to decide each year to continue, they have to take a decision to discontinue. This makes many of them take the right decision and save for their retirement,” she said.

The Finance Minister also emphasized that APY is primarily targeted at helping lower-income groups. It’s expected that most accounts are in lower income brackets. This, she said, shows that the scheme is reaching the right people.

“As regards the majority of pension accounts being in the lower slabs, for a subsidised scheme intended for the below poverty 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,” she said.

Also Read : FM Nirmala Sitharaman Warns Against ‘Unchecked Explosion’ in Futures and Options (F&O) Trading

Who can subscribe to APY?

APY account can be opened by all citizens of India who fulfil the following eligibility conditions.

• The age of an individual should be between 18 and 40 years.
• He / She should have a savings bank account/ post office savings bank account.

However, from 1st October, 2022, any Indian citizen who is or has been an income-tax payer under the Income-tax Act, 1961, as on the date of application, is not eligible to open a new APY account.

Under the scheme, banks reach out to underserved sections of the population. For a pension of Rs 1000/month, subscription is only Rs 42/month (enrolling at age of 18).