Government Pension Scheme for Old Age
Retirement is the beginning of a new step in your life where you want to live life on your own condition.
Whether you want to accomplish new objectives post retirement or you want to like a relaxed and comfortable life,
the critical factor is adequate financial support that offers a regular income, to take care of health care expense,
day-to-day expenditure and assure that you are able to maintain your norm of living.
Therefore, the government of India provides different types of Pension scheme for residents to help them attain a minimum monthly income.
When it comes to government pension scheme for old age or parents, people usually choose from the below listed four plans.
- New Pension Scheme (NPS)
- Atal Pension Yojana (APY)
- Indira Gandhi National Old Age Pension Scheme (IGNOAPS)
- Pradhan Mantri Vaya Vandana Yojana (PMVVY)
Let’s try and understand the basics of the pension scheme, the benefits they offer, and help you make a call on the one that’s best suited to your individual income and requirement.
New Pension Scheme (NPS)
The New Pension Scheme is a pension scheme launched by the Government of India to help Indian citizens create a retirement corpus.
Under NPS, you can make systematic contributions in a profitable avenue that would provide you market-linked returns and a regular income in your post-retirement life.
Any individual citizen of India between the age of 18-60 years can join this scheme.
However, NRI is also eligible to join NPS.
Under SBI NPS, there are two primary account categories—Tier 1 and Tier 2.
Here are key things to know about NPS account.
Also Read National Pension Scheme with SBI : A Complete Guide
NPS Features
| Features | Tier I | Tier II |
|---|---|---|
| Option of selection of the Account | Mandatory | Optional |
| Withdrawal Process | Conditional & Restricted Withdrawal | Quick and Efficient Withdrawal |
| Minimum Contribution at the time of A/c opening | INR 500/- | INR 1000/- |
| Minimum amount of subsequent contribution | INR 500/- | INR 250/- |
| Minimum Contribution Required per year | INR 1000/- | Nil |
| Minimum no. of contribution per year | One only | Nil |
| Frequency of contribution permitted | Unlimited | Unlimited |
| Tax Benefits for Corporates and Corporate employees | *For Employer Prospect: Contributions made by the employer (i.e. up to 10% of Basic + DA) is allowed as a business expense under Section 36(1) of IT Act 1961. *For Employee Prospect: Employees own contribution is eligible for tax deduction presently, u/s 80CCD of IT Act up to 10% of salary (Basic + DA). This is within the overall ceiling of ` 1.50 Lakhs u/s 80 CCE of the IT Act. Subscriber is allowed tax deduction in addition to the deduction allowed u/s 80CCD(1) for additional contribution in his NPS account subject to maximum investment of ` INR 50,000/- u/s 80CCD 1(B). *For Self- Employed/Businessman: 20% of the Gross Income is eligible for tax deduction u/s 80 CCD (1) of IT Act. | Not Available |
Atal Pension Yojana (APY)
| Features | Details |
|---|---|
| APY details | The APY was established by the Government of India (GOI) to provide guaranteed monthly pension to all Indians after the age of 60 years. It mainly aims at poor, under-privileged and workers in the unorganized sector. |
| Eligibility | #1 Any Citizen of India between 18-40 years can join APY provided he/she should have a Savings Bank account. #2 Aadhaar will be the primary KYC. #3 If not available at the time of opening account Aadhaar details may be submitted at a later stage. |
| Minimum & Maximum Pension | Guaranteed minimum monthly pension for subscribers ranging between Rs.1000 and Rs.5000 per month (in multiples of 1000) |
| Who is not eligible | #1 If he is an income tax payer. #2 If he is covered under any of the social security schemes or employees provident fund schemes. #3 Non Resident Indians (NRI) are not eligible to open the account. |
| How to avail the scheme | All bank account holders under the eligible category may join APY with auto-debit facility to accounts, leading to reduction in contribution collection charges. |
| Exit and Pension Payment | #1 Before 60 Years No withdrawal permitted except in the event of terminal disease or death of subscriber #2 After 60 Years Pension amount as selected by the subscriber. #In event of death of subscriber Before 60 years – Entire corpus to be returned to the Spouse/Nominee. After 60 years – Spouse will continue to draw monthly pension while Nominee will receive corpus amount in case of death of both subscriber and spouse. |
| Tax Deduction | Contributions made into the APY are eligible for tax deduction under Section 80CCD. |
Also Read Atal Pension Yojana with SBI : Eligibility | Features | Online & Offline | Chart
APY Contribution Chart and Monthly Pension
| Monthly Pension Amount(Rs.) | |||||
| Age of Entry(Yrs) | 1000 | 2000 | 3000 | 4000 | 5000 |
| Indicative Monthly Contribution Amount(Rs.) | |||||
| 18 | 42 | 84 | 126 | 168 | 210 |
| 20 | 50 | 100 | 150 | 198 | 248 |
| 25 | 76 | 151 | 226 | 301 | 376 |
| 30 | 116 | 231 | 347 | 462 | 577 |
| 35 | 181 | 362 | 543 | 722 | 902 |
| 40 | 291 | 582 | 873 | 1164 | 1454 |
Indira Gandhi National Old Age Pension Scheme (IGNOAPS)
| Features | Details |
|---|---|
| IGNOAPS details | All the beneficiaries above the age of 60 years, whose name is BPL (i.e. Below Poverty Line). Indira Gandhi National Old Age Pension Scheme is provided on the list. |
| Beneficiary | #1. Person of 60 years of age or above. #2. BPL It is necessary to have a name in the family list. |
| Advantages | #1. Age 60 years to 79 years Rs. 200 / – per month by the Government of India and Rs. 400/- Per month by the state government. #2. For age is 80 years or more. 500 / – per month by the Government of India and Rs. 100/- Per month by the state government. |
| How to avail the scheme | 1. Complete the prescribed application form 2. Two photos 3. Samagra I.D. 4. Aadhaar Number 5. Mobile Number 6. Bank Pass Book 7. BPL Card 8. Age proof certificate All the above documents are submitted to the Municipal Office and pension can be accepted as per eligibility or can also be obtained by applying in Public Service Guarantee. |
Pradhan Mantri Vaya Vandana Yojana (PMVVY)
| Features | Details |
|---|---|
| PMVVY details | PMVVY launched by the Central Government acts as an insurance policy cum pension scheme for old age. The pension scheme promises guaranteed pay outs of pension at a certain rate of interest for the tenure. |
| Policy Term | 10 Years |
| Investment limit | INR 15 lakh per senior citizen |
| Minimum Pension | INR 1,000/- per month, INR 3,000/- per quarter, INR 6,000/- per half-year, INR 12,000/- per year. |
| Maximum Pension | INR 12,000/- per month, INR 30,000/- per quarter INR 60,000/- per half-year, INR 1,20,000/- per year |
| Eligibility | Minimum Entry Age – 60 years (completed) |
| Mode of pension payment | The modes of pension payment are monthly, quarterly, half-yearly & yearly. The pension payment shall be via NEFT or Aadhaar Enabled Payment System. |
| Mortgage facility | Mortgage facility is available after completion of 3 policy years. However, the maximum loan that can be granted shall be 75% of the purchase price. |
| Premature Exit Facility | if there is a case of requirement of amount for treatment of Critical/Terminal illness of self or spouse. And the surrender value will be 98 per cent of the purchase price of the scheme. |
| Tax benefits | #1 Investments in this scheme are not eligible for claiming tax deductions u/s 80C of IT Act, 1961. #2 Tax Deduction at Source (i.e. TDS) are applicable to the scheme. #3 This scheme has been exempted from Goods & Services Tax (i.e. GST) |
| How to avail the scheme | Offline as well as online through LIC only, |
Also Read How to Buy LIC Policy Online without Agent?
Minimum Pension and Investment
| Mode of Pension | Minimum Investment(INR) | Minimum Pension(INR) |
|---|---|---|
| Yearly | 1,56,658 | 12,000 |
| Half-yearly | 1,59,57 | 6,000 |
| Quarterly | 1,61,074 | 3,000 |
| Monthly | 1,62,162 | 1,000 |
Maximum Pension and Investment
| Mode of Pension | Maximum Investment(INR) | Maximum Pension(INR) |
|---|---|---|
| Yearly | 14,49,086 | 1,11,000 |
| Half-yearly | 14,76,064 | 55,500 |
| Quarterly | 14,89,933 | 27,750 |
| Monthly | 15,00,000 | 9,250 |