Why Atal Pension Yojana?

When the Finance Minister launched the much awaited Atal Pension Yojana, it was a dream come true for non organised working force. Until now there was no Social Security for the sector like the one that existed for Government Employees. The security shell that a pension provides is so high that Bank’s Employee’s had to undergo series of strikes and bandh’s to get that implemented.

But nothing like that was ever thought of or provided for the unorganized and private sector employees. Government employees after retirement are secured for life and do not need to worry about the money during their old age, same security is not there for the private sector employees. They have to take care of the finances without that security net.

Here are the reasons why each and everyone must open an account in Atal Pension Yojana:

Guranteed Returns:

No matter what the Mutual Funds or the “Scamming” ULIP providers say the returns on those schemes are not guaranteed. So much so that there are too many hidden charges on the premiums you pay. Some ULIP schemes have more than 50% charges on 1st year of premium. That is utter and brazen thievery. Same is not the case in Atal Pension Yojana.

No Withdrawals:

Each and every investment starts with a purpose. The following is for education, the following is for retirement or the following is for buying the car. But life is uncertain or greedy. You see something you want and you decide to break the investment on its maturity and reap its benefits for something else. In Atal Pension Yojana, the corpus will only be paid to your nominee however you are secured with a pension in your old age. So you cannot break the investment. I LOVE THIS!

Decent Returns:

I read so many people comparing the returns with FD’s and RD’s. Let us break it down one by one. First, I will try to examine the returns with RD’s. A quick calculation is as under:

For Rs. 1.7 Lakh corpus which is indicative in the Rs. 1000/month pension a person of 18 years old pays an amount of Rs. 42/month for 42 years.

Now let us calculate the same for Recurring Deposit using the following formula:

Maturity Value of the Recurring Deposits  – based on  Quarterly Compounding)

 

M =R [ (1+i)n – 1]
——————–
1- (1+i) -1/3

 M = Maturity value
R = Monthly installment
n = Number of quarters
i = Rate of interest/400

 

 

 

In order to reach to Rs. 1.7 Lakh with an average ROI of 8% on the RD a person pays same amount of Rs. 42/month. But a person also pays income tax on the interest earned which is not charged in Atal Pension Yojana. So assuming you are in lowest tax bracket. The interest on RD will come to INR Rs. 15,000 on maturity at the end of 42 years. The corpus reduces down to Rs. 1.5 Lakh. Atal Pension Yojana still gives 20,000 more.

Now let us calculate the same for Fixed Deposit, in order to have Rs. 1.7 lakh in corpus you will need to invest Rs. 20,000 today. Because it takes approx. 10 years for money to double at 8% per annum. Again the income tax is applicable on the said return plus you need to have at least 20,000 in  hand to start.

As you can see from the above that Atal Pension Yojana does offer a better and safe alternative to the traditional Fixed Deposits or Recurring Deposits.

Social Security:

No other government has ever thought of providing social security to people of India other than the Narendra Modi led government. The Atal Pension Yojana is one such step. I provides social security to more then 42 crore people. Moreover, the same social security is provided without it being a burden on the government coffers. The scheme offers to pay the nominee full amount on a person’s death and/or pay them the monthly pension whichever is so desired. It gives you and your spouse a better security option since after you are gone your spouse will still have financial security of a kind which can be huge at a person’s old age.

As you can see above that I have tried to explain in a layman’s terms why the scheme is not a bad one and why it is beneficial for each and everyone to enroll in it. Still there are people who just for the sake of opposing will oppose the scheme.

The major reason for opposition to the scheme from the media is their hatred for Narendra Modi and BJP in general. You have to be careful not to miss a golden scheme because same people must already have opened the account in the same scheme.

Just clear your head of hatred for Narendra Modi and think about your future and what an additional sum of money will mean to you when because of your age you can no longer earn much,

So, keep away from nay sayer’s get your Atal Pension Yojana account opened today. Feel the need to be socially secure. Best of luck!