Interim Budget 2024: Prospects of Minimum Pension Hike in Atal Pension Yojana

Interim Budget 2024: Prospects of Minimum Pension Hike in Atal Pension Yojana

Interim Budget 2024: Prospects of Minimum Pension Hike in Atal Pension Yojana

As the nation anticipates Union Finance Minister Nirmala Sitharaman's Interim Budget 2024 announcement on February 1, speculations are rife about potential changes in the Atal Pension Yojana (APY). While major tax reforms might not be on the horizon, there's a buzz that the Centre could be considering an increase in the minimum pension amount under APY.

What We Know So Far

Government sources suggest that a decision on this proposal might come either within the Interim Budget or shortly thereafter, targeting substantial benefits for the unorganised workforce.

Atal Pension Yojana Overview

APY, a government-backed guaranteed pension scheme, currently offers a monthly income ranging from Rs 1,000 to Rs 5,000, with the maximum monthly pension set at Rs 5,000. All Indian citizens aged 18 to 40 are eligible to enroll.

PFRDA's Push for Change

The Pension Fund Regulatory and Development Authority (PFRDA) has urged the Centre to consider increasing the guaranteed pension amount. Deepak Mohanty, Chairman of PFRDA, advocates raising the maximum monthly pension from Rs 5,000 to Rs 10,000. This call stems from the belief that the current amount might not be enticing enough for potential subscribers.

Current Subscribers and Proposals

As of December 31, 2023, pension schemes have witnessed substantial growth, with 97 lakh new subscribers added in 2023 alone. The Atal Pension Yojana attracted 5.3 crore subscribers, accumulating an AUM of Rs 33,034 crore.

NPS and Tax Relaxations

PFRDA has also proposed tax rule relaxations for private sector employers under the National Pension System (NPS) in this year's Budget. The proposal aims to align the tax benefits on employers' NPS contributions with the employees' provident fund (EPF) contribution limit of 12 per cent.

NPS Progress Report

The Centre is expected to submit a progress report on the National Pension System, addressing concerns raised by a Finance ministry team led by finance secretary TV Somanathan. The report assesses modifications and guarantees for government employees under the NPS. However, the Centre remains firm on not increasing the fiscal load or reverting to the old pension system.

The Old Pension Scheme Debate

While the Centre contends that the Old Pension Scheme is financially unviable, dissenting voices argue otherwise. Congress-ruled states like Himachal Pradesh, Rajasthan, and Chhattisgarh have embraced the Old Pension Scheme. The non-contributory OPS entitles a government employee with 20 years of uninterrupted service to a pension equal to 50 per cent of their last salary.

Conclusion

As the nation awaits the Interim Budget, the potential hike in the minimum pension under Atal Pension Yojana holds promise for improving the financial security of the unorganised workforce. The dynamics around the National Pension System and the Old Pension Scheme continue to fuel debates about fiscal viability and the welfare of government employees.