28 January

Atal Pension Yojana (APY)

Category: Moter insurance

It's been 69 years since independence, only 3.9% of India's population was insured till 2013, constituting only 0.8% of GDP said the Minister of Sate for Finance, Mr. Jayant Sinha(don’t use name only refer of finance ministry), while informing the parliament in March 2015, while the global average stood at 6.3%, while the level of insurance penetration depends on a large number of fctors like, the pace of economic developement, extent of savings in financial instruments and size and reach of the insurance sector. Though India among BRICS is ranked above China, Russia but is anked below S.Africa and tad lower than Brazil. Amongst the G20 countries, it is highest for South Africa (15.4 percent) followed by South Korea (11.9 percent); the UK (11.5 percent); Japan (11.1 percent); France (9 percent); Italy (7.6 percent); the US (7.5 percent); Canada (6.9 percent); Germany (6.7 percent); and Australia (5.2 percent)

Those falling below India are : Argentina (3.6 percent); Mexico (2.1 percent); Indonesia (2.1 percent); Turkey (1.5 percent);and Russia (1.3 percent).

Fast forward to December 12, 2017, The health minister confirms that 27% of Indians are covered under insurance now taking the number to 35 crores and yet a staggering 100 crores remain uninsured. While the Organised sector (which employs 6% of of India's population) has been enjoying benefits of PF and Pension for long, it's the unorganised sector (whic employs India's staggering 94% population) which had for long felt neglected. Despite being the real force behind country's food security, purchasing power driving internal demand and helping the country absorb the global effect of recession when it all started in 2007 up till 2009, this class has long been neglected. Not anymore, The APY or the Atal Pension Yojna is an scheme initiated by the government to cover this very core issue. The Farmers, labourers, daily wage workers too can now secure their future at very affordable prices.

Mentioned in the budget speech of 2015 by the Finance Minister, was formally launched on 9th May 2015 by the Prime Minister of India in Kolkata. As of May 2015, only 20% of india's working force had any kind of pension scheme. The government decided that it will cover 50% of the cost or ₹1,000 (US$15) per annum, whichever is lower, to each eligible subscriber account, for a period of 5 years.

So, should the people of organised and unorganised sector be investing in this too?? Well, why not?? But let's make an informed choice, shall we?? In this blog, we will be comparing the government's "Atal Pension Yojna" with "HDFCPRIVATE COMPANY Life Personal Pension Plus Plan" to help you make the choice..!

 

AGE OF ENTRY:  For HDFCPRIVATE COMPANY(don’t  use name of insurance company only private insurance company ) : Minimum 18yrs, Maximum 65yrs., For APY: Minimum 18yrs, Maximum 40yrs.

VESTING AGE: 55yrs for HDFCPRIVATE COMPANY (101% of the premiums guaranteed), 60 yrs for APY (100% of premiums guaranted).

Policy Term: For HDFCPRIVATE COMPANY 10 yrs minimum; For APY 20yrs Minimum.

Annual Premium Amount: For HDFCPRIVATE COMPANY ₹ 24,000 (min), no upper limit; For APY ₹ 1,000.

Sum Assured: For HDFCPRIVATE COMPANY ₹ 2,04,841 (min); For APY ₹1.7 lakh, 3.4 Lakh, 5.1 lakh, 6.8 lakh, 8.5 lakh for ₹1000, ₹2000, ₹3000, ₹4000, ₹5000 category respectievely.

 

The HDFCPRIVATE COMPANY with it's bigger premiums and itself being a private sctor firm as obviously added some intresting features to make their schemes more attractive to the investors, The policy holder can commute 1/3rd of the corpus and avail annuity from remaining part or avail immediate annuity from the entire corpus or use the proceeds to buy a single premium deffered annuity plan from the company.

On death, higher of 101% premiums paid including bonus or 105% of pemiums paid upto death will be paid the nominee who can choose between annuity or take the entire benefits under HDFCPRIVATE COMPANY pension plan.

APY Details:

Source: pfrda.org.in

APY provides guaranteed pension of Rs 1,000 to Rs 5,000 (as explained above) to the subscribers. The scheme also allows a subscriber to decrease or increase pension amount during the course of accumulation phase, once an year.

In case of death of subscriber, the spouse of the subscriber shall be entitled for the same amount of pension till his or her death. And after the demise of both spouse and subscriber, the nominee will be entitled to receive the pension money that the subscriber had accumulated till 60 years of age.

However if the subscriber dies before 60 years, the spouse will have the choice to either exit the scheme and claim the accumulated amount or continue maintaining the account under the subscriber's name for the remaining vested years.The spouse of the subscriber shall be entitled to receive the same pension amount as the subscriber until death of the spouse in the latter case.

Restrictions on government contribution

However if you are a part of any other social security scheme and a tax payer, then you are not entitled for government contribution. For instance, members of the Social Security Schemes under the following enactments would not be eligible to receive Government co-contribution:

1. Employees' Provident Fund & Miscellaneous Provision Act, 1952.

2. The Coal Mines Provident Fund and Miscellaneous Provision Act, 1948.

3. Assam Tea Plantation Provident Fund and Miscellaneous Provision, 1955.

4. Seamens' Provident Fund Act, 1966.

5. Jammu Kashmir Employees' Provident Fund & Miscellaneous Provision Act, 1961.

6. Any other statutory social security scheme.

Source: pfrda.org.in

Penalties for default

Deductions will be made in the subscribers account for account maintenance charges & other related charges on a periodic basis. Once the account balance in the subscriber's account becomes zero due to deduction of account maintenance charges, fees and overdue interest, the account would be closed immediately. If there's a continuous default for 6 months, you pension account will be freezed and if there's a continuous default for 12 months, the account will get closed and whatever balance is left after the above said deductions will be given to the subscriber.

For delayed contributions a penalty of Rs. 1 per month for contribution of every Rs. 100, or part thereof, for each delayed monthly contributions. Which implies:

Rs.1 per month for contribution upto Rs.100 per month.

Rs.2 per month for contribution upto Rs.101 to 500 per month.

Rs.5 per month for contribution between Rs.501 to 1000 per month.

Rs.10 per month for contribution beyond Rs.1001 per month.

Exit before the age of 60 Years:

 

As per circular dated May 2, 2016 on PFRDA website, voluntary exit in APY is generally not permitted. However in case of exceptional circumstances such as terminal illness, or death of the subscriber it can be allowed. In case a subscriber, who has availed Government co-contribution under APY, chooses to voluntarily exit APY at a future date, he shall only be refunded the contributions made by him to APY, along with the net actual accrued income earned on his contributions (after deducting the account maintenance charges). The Government co-contribution, and the accrued income earned on the Government co-contribution, shall not be returned to such subscribers.

 

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