Modi govt's Atal Pension Yojana is full of glitches and grey areas. Here are some

The recently notified Atal Pension Yojana (APY) to carry forward the ideal enunciated in the Finance Minister’s 2015-16 budget speech of making old age pension universal in the vast unorganised sector to which as much as 88% of the population belongs, has a huge swathe of grey as well as glitches in it. They must be corrected/ clarified at the earliest so that the issues are not allowed to fester.

One of the conditions for eligibility is one must not be an income tax payer. Now this is the common man’s language good enough for his understanding but not good enough when legal hair-splitting becomes inevitable for some reason or the other.

To wit, a person may have taxable income but must have been blasé about paying income tax and blasé about filing his income tax return as well as a corollary. To be sure, the intention of the APY is to keep it out of the reach of such willful defaulters but in law nothing must be left to presumption given the grave consequences of misstatements – closure of account together with forfeiture of amount hitherto deposited.

Likewise, is the status of income tax payer as a disqualification to be reckoned every year or only at the time of first contribution? The APY envisages minimum 20-year contribution. Will a person be asked to disembark midstream if he were to graduate as income taxpayer while he wasn’t one all these years?

At the more fundamental level, is this disqualification - income-tax payment - applicable only for the early bird incentive? The early bird incentive is for those who join the scheme between June and December 2015.

For them, the government will co-contribute for five years 50% of a member’s subscription subject to a ceiling of Rs 1000 per month. It would be better if the main disqualifications - membership of social security schemes and the status of being the income tax payer - are applicable at all times or only for being eligible for government co-contribution.

Similarly, a member while belonging to the unorganised sector, and not savouring social security measures at the time of joining might later on find employment in the organised sector and get to savour the social security benefits. Will he then become ineligible to continue in the scheme especially to savour the government’s co-contribution?

By the way it would be conducive to clarity if the list of social security measures are spelt out so that there is no dispute over the eligibility criteria.

Though a part of the New Pension scheme (NPS) operated by Pension Fund Regulatory and Development Authority (PFRDA), members of APY have no choice over the pattern of investment of their corpus but will have to go by what is prescribed under the scheme.

Fair enough, given the general financial ignorance of persons in the unorganised sector. But then, they need not remain condemned to this status forever. Should they migrate to the organised sector, would they get this freedom to choose the pattern of investment - the composition of debt and equity in the investment basket?

Continued failure to contribute for 24 months results in closure of account. Now what exactly are the consequences? Will the amounts deposited hitherto lapse and go up in smoke because there is no way premature withdrawals i.e. before the age of 60 can be made and that too through modes other than pension except in case of death or serious ailment which incidentally must be spelt out along with which doctor has the final word on the issue.