PFRDA has released a commission structure for banks to distribute Atal Pension Yojana (APY). Banks will get a minimum commission of Rs.100 each application. Further, banks will get a promotional incentive of a minimum of Rs.20 to distribute such schemes.
Banks can also appoint mutual fund distributors to distribute this scheme. They will have to share 50% percent commission with such distributors.
In a circular, the pension fund regulator said that per capita incentive to distribute APY is fixed at Rs.100. Per capita incentive means commission per application. Apart from this, banks will also get promotional incentives which increase with the number of schemes sold. PFRDA has fixed a promotional incentive of Rs. 20 for first 1 lakh applications. Similarly, it is Rs.30 for 1-3 lakh applications, Rs.40 for 3-5 lakh applications and Rs. 50 for over 5 lakh applications.
The APY is a defined contribution plan which provides monthly life annuity along with return of maturity corpus to its subscribers. Subscribers can opt for a fixed monthly pension of Rs.1,000, Rs.2,000, Rs.3,000, Rs.4,000 and Rs.5,000 per month. Government will contribute 50% of the contribution or Rs.1,000 whichever is lower for the first five years to the subscriber’s account joining before December 31, 2015. PFRDA has been appointed to oversee this scheme which is more or less in line with the NPS Swavalamban scheme.
A rough calculation of a 25 year old subscriber who opts the pension of Rs.1,000 with return of maturity corpus shows that the scheme gives a return of 8.16% during accrual phase and 7.33% on disbursal phase (life expectancy 80 years or 20 years post retirement).
