Which one of the following statements is not correct for Atal Pension Yojana?

Correct — D, (d) It is applicable to all citizens of India aged above 40 years. Read the stem to its end: the word not is printed in bold italic, and the question asks which statement is NOT correct. Three of the four statements describe Atal Pension Yojana accurately; this one inverts its age rule.

The scheme is open to citizens of India between the ages of 18 and 40 — not above 40. The upper limit is not arbitrary. The pension begins at 60 and the scheme is built on a minimum contribution period of twenty years, so a subscriber who joins on his fortieth birthday contributes for exactly twenty years and one who joins later cannot. Turn the option round and it becomes the true statement: Atal Pension Yojana is applicable to citizens of India aged between 18 and 40 years.

The other three statements are correct as the scheme was framed. The subscriber chooses a guaranteed monthly pension of ₹ 1,000, ₹ 2,000, ₹ 3,000, ₹ 4,000 or ₹ 5,000 payable from the age of 60, which is the range option (a) states; the amount he must contribute each month is then fixed by that choice together with his age at entry, so the younger he joins the less he pays. The minimum pension is guaranteed by the Government of India, which is what option (b) says and what distinguishes the scheme from an ordinary market-linked pension product: if the accumulated corpus falls short of what is needed to pay the assured pension, the Government makes up the difference. And the Government co-contributes 50 per cent of the subscriber’s contribution or ₹ 1,000 a year, whichever is lower, exactly as option (c) states.

One piece of context belongs beside option (c) rather than inside it. That co-contribution was not open-ended: it was payable for five years, and only to subscribers who joined the scheme between 1 June 2015 and 31 March 2016, who were not income-tax payers and who were not covered by any statutory social security scheme. Option (c) states the formula, and the formula is right; the eligibility window is the detail a later paper would use to build a harder version of this question.

Why the others are wrong

• (a)There is guaranteed minimum monthly pension for the subscribers ranging between ₹ 1,000 and ₹ 5,000 per month. — The Commission’s key does not take this option, and correctly so: the statement is accurate, which on a ’not correct’ item is precisely what disqualifies it. Atal Pension Yojana offers five fixed pension slabs — ₹ 1,000, ₹ 2,000, ₹ 3,000, ₹ 4,000 and ₹ 5,000 a month — payable to the subscriber from the age of 60, so the guaranteed minimum monthly pension does range between ₹ 1,000 and ₹ 5,000. On the subscriber’s death the same pension is payable to the spouse, and on the spouse’s death the accumulated corpus goes to the nominee.
• (b)The benefit of minimum pension would be guaranteed by the Government of India. — The Commission’s key does not take this option either, because it too is a correct statement of the scheme. The guarantee of the minimum pension by the Government of India is the defining feature of Atal Pension Yojana: contributions are invested under the National Pension System architecture and are regulated by the Pension Fund Regulatory and Development Authority, but the subscriber is promised a fixed rupee pension rather than whatever the investment returns produce, and the Government stands behind that promise. Where the returns exceed what is needed, the excess goes to the subscriber; where they fall short, the Government funds the shortfall.
• (c)Government of India co-contributes 50% of the subscriber’s contribution or ₹ 1,000 per annum, whichever is lower. — The Commission’s key does not take this option, and the formula it states is the scheme’s own: the Government of India co-contributes 50 per cent of the subscriber’s contribution or ₹ 1,000 per annum, whichever is lower. Note the word ’lower’ and treat it as the thing to check, because reversing it to ’higher’ is the obvious way to turn this true statement into a false one, and a later paper may do exactly that. Read alongside it the limits that the option does not mention: the co-contribution ran for five years, and only for subscribers who enrolled between 1 June 2015 and 31 March 2016 and were neither income-tax payers nor members of any statutory social security scheme.

Atal Pension Yojana was launched on 9 May 2015, replacing the earlier Swavalamban Yojana, and is aimed squarely at workers in the unorganised sector, who have no employer to run a provident fund for them. It is administered by the Pension Fund Regulatory and Development Authority through the National Pension System architecture, and enrolment is through a bank or post office account with contributions collected by auto-debit. The design has four moving parts. First, entry age: 18 to 40, so that every subscriber contributes for at least twenty years before the pension begins at 60. Second, choice of pension: five slabs from ₹ 1,000 to ₹ 5,000 a month, chosen at entry. Third, contribution: fixed by the chosen slab and the age at entry, and therefore lowest for the youngest entrants, which is how the scheme encourages early enrolment. Fourth, guarantee: the minimum pension is guaranteed by the Government of India, so the subscriber carries no investment risk on the assured amount. The pension is payable to the subscriber for life, then to the spouse for life, and the accumulated corpus is returned to the nominee thereafter. Alongside it sit the two insurance schemes of the same Jan Suraksha family — Pradhan Mantri Jeevan Jyoti Bima Yojana for life cover and Pradhan Mantri Suraksha Bima Yojana for accident cover — and the three are almost always studied and tested together.

Key facts

• Atal Pension Yojana is open to citizens of India aged between 18 and 40 years, so the statement that it applies to those aged above 40 is wrong.
• The pension begins at the age of 60, and the entry age limit of 40 secures a minimum contribution period of twenty years.
• Guaranteed monthly pension slabs are ₹ 1,000, ₹ 2,000, ₹ 3,000, ₹ 4,000 and ₹ 5,000.
• The minimum pension is guaranteed by the Government of India, which funds any shortfall in the accumulated corpus.
• The Government co-contributes 50 per cent of the subscriber’s contribution or ₹ 1,000 per annum, whichever is lower.
• That co-contribution was payable for five years and only to subscribers who joined between 1 June 2015 and 31 March 2016, who were not income-tax payers and were not covered by any statutory social security scheme.
• The scheme was launched on 9 May 2015 in place of Swavalamban Yojana and is administered by the Pension Fund Regulatory and Development Authority.
• On the subscriber’s death the pension passes to the spouse, and on the spouse’s death the accumulated corpus goes to the nominee.

Common traps

• Missing the negative ask. The word not is printed in bold italic in this stem, and three of the four statements are true.
• Reading the entry age as an eligibility floor only. The scheme has both a floor of 18 and a ceiling of 40, and the ceiling is what this item tests.
• Reversing ’whichever is lower’ to ’whichever is higher’ in the co-contribution formula.
• Treating the Government co-contribution as a permanent feature. It ran for five years and only for a defined enrolment window.

• practice — not a real PYQ

  The entry age for enrolment under Atal Pension Yojana is

  • (a)18 to 40 years
  • (b)18 to 50 years
  • (c)21 to 45 years
  • (d)40 to 60 years

  Answer(a) 18 to 40 years

• practice — not a real PYQ

  Under Atal Pension Yojana, the Government of India’s co-contribution for eligible subscribers was

  • (a)50 per cent of the subscriber’s contribution or ₹ 1,000 per annum, whichever is lower
  • (b)50 per cent of the subscriber’s contribution or ₹ 1,000 per annum, whichever is higher
  • (c)100 per cent of the subscriber’s contribution up to ₹ 2,000 per annum
  • (d)25 per cent of the subscriber’s contribution with no monetary ceiling

  Answer(a) 50 per cent of the subscriber’s contribution or ₹ 1,000 per annum, whichever is lower