Pension Fund Regulatory and Development Authority of India (PFRDA) announced the launch of this facility through a circular dated October 27, 2021.
“Now to further enhance the outreach and simplify the process of membership, the CRA (Central Recordkeeping Agency) will provide digital on boarding through Aadhaar. e-KYC as an additional option. Aadhaar XML based on boarding has already been made available for the benefit of the members. The PFRDA circular states that these processes are paperless.
How will the process work?
As per the circular, “The information received from potential customers through e-KYC technology framework such as Aadhaar details, demographic information, pension amount, mode of payment, spouse/nominee name and bank account information etc. will be shared with the respective banks. Where the savings bank account of the customers is maintained through online information exchange for setting up auto debit for specified amount/mode based on the guaranteed pension amount chosen by the subscriber. The servicing will be offered by the respective APY service providers”.
Thus, to ease the process of subscribing to APY, PFRDA has asked all APY service provider banks to provide e-APY link on their respective corporate website for the benefit of their customers.
Further, CRAs have been advised to engage with all APY service providers for system-level integration so that e-KYC based APY on-boarding and consent framework for Aadhaar seeding can be made available at the earliest.
Linking Aadhaar-APY Accounts
All APY accounts are to be linked with Aadhaar number, for which CRA will provide functionality to existing APY customers to facilitate Aadhaar seeding through proper consent mechanism. In addition, APY service providers may also collect Aadhaar details with proper consent from their affiliated customers, which will then be shared with the CRA as per the circular.
What is APY?
APY was launched by the government on 1st June 2015 to provide social security to those working in the unorganized sectors. The scheme provides monthly pension of Rs.1,000/Rs.2,000/Rs.3,000/Rs.4,000/Rs.5,000 from the age of 60 years. You have to make monthly contributions based on the fixed amount of monthly pension chosen by you.
For example, if you are 25 years old and want to get a pension of Rs 2,000 then you have to contribute Rs 151 per month till the age of 60 years i.e. till 35 years. Similarly if you want to get a pension of Rs.5,000, your monthly contribution will be Rs.376 for the next 35 years. The monthly contribution will remain the same throughout the contribution period.
Eligibility to open APY account
An individual is eligible to open an APY account if he fulfills the following conditions:
a) an Indian citizen
b) Have a valid bank account for auto-debit of monthly contribution
c) and is between the age of 18 years to 40 years