Module: General Practice
Q156: Consider the following statements regarding the Atal Pension Yojana (APY):
Assertion (A): A 18-year-old joining APY for a ₹5,000 pension will pay a much lower monthly contribution compared to a 35-year-old joining for the same pension amount.
Reason (R): The 18-year-old has a longer "accumulation phase" (42 years) to build the corpus, allowing the compound interest to work effectively, whereas the 35-year-old has a shorter duration (25 years) to reach the same target corpus.
Reason (R): The 18-year-old has a longer "accumulation phase" (42 years) to build the corpus, allowing the compound interest to work effectively, whereas the 35-year-old has a shorter duration (25 years) to reach the same target corpus.
✅ Correct Answer: A
🎯 Quick Answer:
Both are true, and R is the correct explanation.Structural Breakdown: 1. Mechanism: APY contributions are actuarially calculated.
2. Example: An 18-year-old might pay approx ₹210/month for a ₹5,000 pension, while a 39-year-old might pay over ₹1,300/month for the same benefit.
3. Logic: The longer the investment horizon, the smaller the required monthly outflow to hit the target corpus needed to sustain the pension at age 60.