New Delhi: The National Pension Scheme (NPS) and Atal Pension Yojana (APY) have seen a surge in enrollments in the current fiscal year, crossing 1.35 crore subscribers as of March 2023. The government-backed pension schemes have become increasingly popular as individuals seek long-term financial security and retirement benefits.
The NPS, launched in 2004, is a voluntary, defined contribution pension system in which individuals contribute towards their retirement savings, which are then managed by professional fund managers appointed by the Pension Fund Regulatory and Development Authority (PFRDA). The scheme is open to all Indian citizens between the ages of 18 and 65 and offers two types of accounts – Tier I and Tier II.
The Tier I account is the basic account for saving towards retirement and is mandatory for all subscribers. The Tier II account is a voluntary savings account that can be opened alongside the Tier I account and allows subscribers to withdraw their funds at any time. However, withdrawals from the Tier I account are only permitted after the subscriber reaches the age of 60, and up to 60% of the accumulated corpus can be withdrawn as a lump sum, with the remainder used to purchase an annuity.
Meanwhile, the APY was launched in 2015 to provide guaranteed minimum pension to subscribers who join the scheme between the ages of 18 and 40. The scheme offers a fixed minimum pension ranging from Rs 1,000 to Rs 5,000 per month, depending on the contribution amount and the age of the subscriber at the time of joining.
The NPS and APY have proven to be attractive options for individuals seeking long-term financial security and retirement benefits. The schemes offer tax benefits under Section 80C of the Income Tax Act, and the funds are managed by professional fund managers, which helps to ensure that the investments are managed efficiently.
The PFRDA has taken several initiatives to increase awareness and encourage enrollment in the schemes. It has launched digital initiatives such as eNPS and APY@eNPS, which allow individuals to open accounts and make contributions online. Additionally, the PFRDA has partnered with various banks and financial institutions to make it easier for individuals to enroll in the schemes.
In conclusion, the NPS and APY have seen a surge in enrollments in the current fiscal year, indicating a growing awareness among individuals about the importance of retirement planning. With the government and the PFRDA taking steps to increase awareness and simplify the enrollment process, it is expected that more individuals will take advantage of these schemes to secure their financial future.