Finance Minister Nirmala Sitharaman on Tuesday slammed Congress leader Jairam Ramesh for terming NDA government’s flagship scheme, Atal Pension Yojana (APY), as a “poorly-designed” scheme, National media organisation reported.
Atal Pension Yojana (APY) is a pension scheme focused on the unorganised sector workers and is first of its kind. Under the APY, a guaranteed minimum pension of Rs. 1,000/- or 2,000/- or 3,000/- or 4,000 or 5,000/- per month will be given at the age of 60 years depending on the contributions by the subscribers.
Congress general secretary Jairam Ramesh on Tuesday said the scheme is a “fitting representation of the Modi Government’s policy making: headline management, with few benefits actually reaching the people”.
His attack was based on a media report that claimed that nearly one of three subscribers who dropped out of the central government’s pension scheme for the unorganised sector, the Atal Pension Yojana (APY), did so because their accounts were opened without their “explicit” permission.
The report cited a recent sample study by the Indian Council of Social Science Research (ICSSR).
Defending the scheme and slamming the Opposition, FM Sitharaman said the Atal Pension Yojana is a subsidised scheme intended for the poor and the lower middle class.
Taking to X, FM said: “Atal Pension Yojana 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. This makes many of them take the right decision and save for their retirement. 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: “As regards the 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!”.
Sitharaman added: “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%.”
Ramesh said nearly 83 per cent of the subscribers are in the lowest slab of Rs. 1,000 pension, 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, Ramesh said.
“The ‘flagship’ Atal Pension Yojana is a very poorly-designed scheme, a paper tiger that needs officials to hoodwink and coerce people into participating in it. It’s a fitting representation of the Modi Government’s policy making: headline management, with few benefits actually reaching the people!” he said.
Atal Pension Yojana is a social security scheme initiated by the Government of India and is aimed at providing a steady stream of income after the age of 60 to all citizens of India.
It is a pension scheme focused on the people employed in the unorganised sector such as maids, delivery boys, gardeners, etc.
Beneficiaries of Atal Pension Yojana (APY) shall receive their accumulated corpus in the form of monthly payments.
Features
1. Atal Pension Yojana has the facility of automatic debit. The bank account of a beneficiary is linked with his/her pension accounts and the monthly contributions are directly debited.
2. Beneficiaries of the scheme can choose to receive a periodic pension of Rs. 1000, Rs. 2000, Rs. 3000, Rs. 4000, or Rs. 5000, depending on their monthly contributions.
3. Individuals who are above 18 years and below 40 years of age can decide to invest in the Atal Pension Yojana.
4. If a beneficiary has attained the age of 60, he/she shall be eligible to annuitise the entire corpus amount, i.e. receive monthly pensions after closing the scheme with the respective bank.
5. One can only exit this scheme before reaching the age of 60 under circumstances like terminal illness or death.
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