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Atal Pension Yojana vs Pradhan Mantri Shram Yogi Maandhan Yojana

IndianMoney.com Research Team | Posted On Monday, February 04,2019, 01:10 PM

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Atal Pension Yojana vs Pradhan Mantri Shram Yogi Maandhan Yojana

 

 

Atal Pension Yojana vs Pradhan Mantri Shram-Yogi Maandhan Yojana

Atal Pension Yojana or APY is a Government backed pension scheme, targeting the unorganized sector in India. APY aims to help workers in the unorganized sector save money for old age and guarantees post retirement income.

What is Atal Pension Yojana?

APY was launched in 2015 to help drivers, maids, plumbers and gardeners save for old age. APY is a social security scheme which helps the unorganized sector save when they earn and enjoy guaranteed pension in retirement.

APY promises a co-contribution by the Central Government of 50% of the total prescribed contribution by a worker, up to Rs 1,000 a year. This is only for workers who joined APY before 31st December 2015. The co-contribution would be made only for 5 years from FY 2015-2016 to FY 2019-20.

What is Pradhan Mantri Shram-Yogi Maandhan Yojana?

The Finance Minister announced a mega pension scheme in Budget 2019. The pension Yojana called Pradhan Mantri Shram-Yogi Maandhan Yojana for workers with a monthly income up to Rs 15,000 could be the largest pension scheme in 5 years. Workers would get an assured pension of Rs 3,000 a month from the age of 60 years, on making a monthly contribution in working years.

What’s great about Pradhan Mantri Shram-Yogi Maandhan Yojana? A worker in the unorganized sector who joins at 29 years will have to make a contribution of just Rs 100 a month till 60 years. He gets an assured pension of Rs 3,000 a month after 60 years.

A worker who joins Pradhan Mantri Shram-Yogi Maandhan Yojana at 18 years makes a monthly contribution of just Rs 55 till 60 years, to get pension in retirement. The Government will make an equal matching contribution to workers pension account each month. This scheme could benefit 42 crore workers in unorganized sector in India like street vendors, rickshaw pullers, construction workers, rag pickers, agricultural workers, beedi workers, handloom and those who work in leather industries.

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Atal Pension Yojana vs Pradhan Mantri Shram-Yogi Maandhan Yojana: Contribution

The Pradhan Mantri Shram-Yogi Maandhan Yojana can turn a contribution of Rs 660 a year to Rs 36,000 yearly pension from the age of 60 years.

A worker who joins Pradhan Mantri Shram-Yogi Maandhan Yojana at 18 years and makes a contribution of just Rs 55 a month (This is Rs 660 a year) gets Rs 3,000 a month from the age of 60 years. (This is Rs 36,000 a year). The Government also deposits an equal matching amount in the workers account each month.

Atal Pension Yojana vs Pradhan Mantri Shram-Yogi Maandhan Yojana Pension scheme

Let’s compare Pradhan Mantri Shram-Yogi Maandhan Yojana with APY. APY is a periodic contribution based pension plan and promises a fixed monthly pension of Rs 1,000/Rs 2,000/Rs 3,000/Rs 4,000 or Rs 5,000.

To get a monthly pension of Rs 3,000 at 60 years, you must deposit Rs 126/month, if you start at 18 years. It is just Rs 55/month for Pradhan Mantri Shram-Yogi Maandhan Yojana if you join at 18 years. What happens if you join APY at 29 years? To get a monthly pension of Rs 3,000 at 60 years, you must make a contribution of Rs 318 a month. This is just Rs 100 a month if you join Pradhan Mantri Shram-Yogi Maandhan Yojana at 29 years. APY does score over Pradhan Mantri Shram-Yogi Maandhan Yojana when it comes to amount of pension. You can get a monthly pension of Rs 5,000 in APY while it’s just Rs 3,000 a month in Pradhan Mantri Shram-Yogi Maandhan Yojana.

See Also: pension plans in india

Disadvantages of APY:

  • The minimum age of joining APY is 18 years while the maximum age is 40 years. You can’t join APY after 40 years.
  • You must have a bank account to join APY.
  • The Government co-contributes 50% of the total contribution or Rs 1,000 a year, whichever is lower.
  • You can join APY only between June 1st 2015 and December 31st 2015. If you missed the bus, there’s no joining the scheme. The scheme continues only for 5 years till FY 2019-20.
  • There are penalties for closing APY before maturity and defaults on contribution.

What about Pradhan Mantri Shram-Yogi Maandhan Yojana?

It’s a new scheme and a lot of clarity is needed. You can join Pradhan Mantri Shram-Yogi Maandhan Yojana with just a Pradhan Mantri Jan Dhan Yojana Account. Pension would be transferred on the lines of DBT (Direct Benefit Transfer). It would be great if maximum age of joining Pradhan Mantri Shram-Yogi Maandhan Yojana could be higher than the 40 years under APY. Under Pradhan Mantri Shram-Yogi Maandhan Yojana the Government will match the deposit of the worker each month. 

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