Home >Money >Personal Finance >PFRDA stops auto debit of contributions for 2.23 crore Atal Pension Yojana users

In a bid to provide relief to the unorganised sector affected by the Covid 19 driven economic shutdown, the PFRDA has halted auto debit of monthly contributions for the government’s flagship Atal Pension Yojana (APY) till 30th June. This scheme has about 2.23 crore subscribers, largely from the unorganised sector. APY contributions are collected through monthly auto debit rather than by cash or cheque.

“The majority APY subscribers belong to the lower strata of the society, which as indicated above are expected to suffer the most during the lock-down and post lock-down for some period. In such scenario, it may be difficult for them to keep contributing to the scheme regularly during such period," said the PFRDA Circular. APY subscribers can pay the deferred monthly contributions from 1st July to 30th September 2020, without any penal interest. Ordinarily, each default attracts a penalty of 1% which is collected by the subscriber’s bank. The PFRDA Circular added that the modality for this deferred collection will be subsequently notified.

The APY offers a minimum guaranteed monthly pension ranging from 1,000 per month to 5,000 per month from the age of 60. The pension is fully taxable. Subscribers from the ages of 18 to 40 can join the APY and they have to make contributions as per a schedule that varies according to their age and desired pension amount. For example, a 30 year old subscriber must pay 116 per month for a pension of 1,000 per month at the age of 60. 73% of APY subscribers have chosen 1,000 as their pension amount.

Recently the PFRDA allowed NPS subscribers to withdraw up to 25% of their contributions on grounds of medical emergency due to Covid 19. This would be catergorised as a partial withdrawal and would be tax free. However this partial withdrawal facility was not extended to APY subscribers.

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