Atal Pension Yojana (APY) - Scheme Details, Features & Benefits (2024)

What is Atal Pension Yojana (APY)?

The Atal Pension Yojana (APY) is a government-initiated pension scheme that provides social security to individuals in the unorganized sector. Named after former Prime Minister Atal Bihari Vajpayee, the scheme offers subscribers a guaranteed minimum pension after 60 years of age. This guide provides a detailed overview of the APY, its benefits, eligibility criteria, and other crucial aspects.

Atal Pension Yojana

Launched in May 2015, the Atal Pension Yojana is a pension scheme targeted primarily at workers in the unorganized sector. It is administered by the Pension Fund Regulatory and Development Authority (PFRDA) and aims to offer financial security and stability during old age.

Key Features of Atal Pension Yojana

1. Guaranteed Minimum Pension: APY guarantees a fixed pension ranging from INR 1,000 to INR 5,000 per month, depending on the contribution made by the subscriber.
2. Government Co-contribution: For eligible subscribers, the government contributes 50% of the total contribution or INR 1,000 per annum, whichever is lower, for the first five years.
3. Flexible Contributions: Subscribers can choose their contribution amount based on the desired pension amount.
4. Age Eligibility: Individuals aged between 18 and 40 years can join the APY.
5. Automatic Debit: Contributions are automatically debited from the subscriber’s bank account to ensure regular payment.

Benefits of Atal Pension Yojana

Financial Security in Old Age

APY provides a steady source of income to individuals after they reach 60 years, ensuring financial independence during retirement.

Guaranteed Pension

The scheme offers a guaranteed pension amount, providing certainty and helping subscribers plan their post-retirement finances.

Tax Benefits

Contributions made towards APY are eligible for tax benefits under Section 80CCD of the Income Tax Act, helping subscribers save on taxes.

Easy to Join and Manage

The scheme is easy to join and manage, with minimal paperwork and the convenience of automatic debit from the subscriber’s bank account.

Also Read: NPS Returns

Atal Pension Eligibility Criteria

To be eligible for the Atal Pension Yojana, an individual must meet the following criteria:

• Age: Must be between 18 and 40 years.
• Bank Account: Must have a savings bank account.
• Contribution Period: Must contribute for a minimum of 20 years.
• Income: Should not be a taxpayer.

How to Enroll in Atal Pension Yojana?

Step-by-Step Enrollment Process

1. Approach Your Bank: Visit the nearest branch of any participating bank.
2. Fill the APY Form: Obtain and fill out the APY registration form.
3. Provide Necessary Details: Submit your Aadhaar number and mobile number.
4. Choose the Pension Amount: Select the desired monthly amount for a pension of (Rs 1,000 to INR 5,000).
5. Submit the Form: Submit the completed form to the bank.

Required Documents

1. Aadhaar Card: For identity verification.
2. Bank Passbook: To link the savings account.
3. Mobile Number: For communication and updates.

Contribution and Pension Calculation

Contribution Amount

The contribution amount varies based on the age at which the subscriber joins and the desired monthly pension. For example:

• Age 18: To receive INR 1,000 per month, the monthly contribution would be INR 42.
• Age 40: To receive INR 1,000 per month, the monthly contribution would be INR 291.

Pension Amount

The predetermined pension amount ranges from INR 1,000 to INR 5,000 per month. The pension is paid out once the subscriber reaches the age of 60.

Withdrawal and Exit

Normal Exit

Subscribers can exit the Atal Pension Scheme and start receiving the pension once they reach 60 years of age.

Premature Exit

In case of the subscriber’s death before the age of 60, the spouse can either continue the scheme or exit and claim the accumulated corpus. If both the subscriber and spouse pass away, the nominee will receive the accumulated corpus.

Also Read: KVP Interest Rate

Comparison with Other Pension Schemes

Atal Pension Yojana vs. National Pension System (NPS)

• Target Audience: The APY scheme is aimed at workers in the unorganized sector, whereas NPS is available to all Indian citizens.
• Contribution: The APY scheme has fixed contributions based on the desired pension amount, while NPS allows flexible contributions.
• Pension Amount: APY offers a guaranteed pension, while NPS pension depends on the accumulated corpus and annuity plan chosen.

Importance of Atal Pension Yojana

Social Security

APY scheme provides a much-needed social security net for individuals in the unorganized sector who typically lack access to employer-provided pension schemes.

Encourages Savings

The APY scheme encourages long-term savings and financial planning among the lower-income groups.

Government Support

Government co-contribution enhances the attractiveness of the Atal Pension Plan and provides an additional incentive for individuals to join.

Common Issues and Solutions

Missed Contributions

If contributions are missed, the account will remain active but penalties will be charged. Subscribers should ensure sufficient balance in their bank account to avoid this.

Change in Contribution Amount

Subscribers can change their contribution amount once a year. This can be done by submitting a request to the bank.

Account Closure

Subscribers can close their APY account by submitting a formal request to their bank, especially in cases of permanent disability or terminal illness.

Conclusion

The Atal Pension Yojana is a vital financial instrument that provides social security to millions of Indians working in the unorganized sector. By ensuring a steady income post-retirement, APY helps promote financial stability and independence. Its easy enrollment process, government support, and guaranteed pension make it an attractive option for those looking to secure their future.

There are many pension yojana schemes in India you can invest your money in. Research well, set your financial goals, and get started with a pension yojana scheme.