Details about Atal Pension Yojana (APY) Scheme
The Atal Pension Yojana is open to all Indian citizens between the ages of 18 and 40 years of age. The pension starts after the participant in the scheme reaches the age of 60 years.
It’s only a fortunate few in India who have the luxury of having enough money to support themselves in old age. Only the middle class enjoys the benefits of pensions or a retirement nest egg. For the vast majority of working people, like vegetable vendors, drivers, domestic help, watchmen and so on, old age means complete dependence on their children, who may or may not care for them.
So in an effort to provide financial protection to people working in the unorganized sector in their old age, the government came up with the Atal Pension Yojana, or APY, in 2015. The aim of the scheme is to encourage working class people to save for their old age, and ensure they have adequate funds after their working lives come to an end. The scheme guarantees pensions of between Rs 1,000 and Rs 5,000 for participants. So it’s important to understand what is APY so that you are able to get the benefits.
The Atal Pension Yojana replaces the Swavalamban Scheme, which was launched in 2010. Subscribers to the Swavalamban Scheme have been migrated to the new scheme.
What is Atal Pension Yojana?
The Atal Pension Yojana is administered by the Pension Fund Regulatory and Development Authority (PFRDA). Here are some of its features:
• The Atal Pension Yojana is open to all Indian citizens between the ages of 18 and 40 years of age.
• The pension starts after the participant in the scheme reaches the age of 60 years. So a participant will be contributing for 42 years if he joins at the age of 18, or 22 years if he enters the scheme at 60.
• APY subscribers have the option of choosing between getting a pension of Rs 1,000, Rs 2,000, Rs 3,000, Rs 4,000 and Rs 5,000 a year. The amount of pension participants get will depend on his or her contribution. Those who join earlier will have to pay less and will get more pension.
• The government will also contribute 50 percent of the subscriber’s contribution or Rs 1,000 per year, whichever is lower. This applies only for those who are not covered by any statutory social welfare schemes and are not income tax payers. However, the government contribution will be only for a period of five years — for those who joined the scheme between 1 June and 31 December 2015.
• You get a tax benefit under Section 80CCD for contributions made to the Atal Pension Yojana. The maximum amount that can be deducted from taxable income under this scheme is Rs 2 lakh a year. Combined deduction under Section 80C and Section 80CCD cannot exceed Rs 2 lakh.
• To participate in Atal Pension Scheme, you will need to have an account with a bank or a post office. The contribution amount will be auto-debited from this account. So you have to ensure that there is enough balance in your account on due dates. If not, you may have to pay a late payment penalty.
• The APY account can be opened at banks across the country.
Eligibility for Atal Pension Yojana
- Any Indian citizen between the ages of 18 and 60 is eligible for the scheme.
- You will need to have a bank account to take part in APY.
- You will also need to get your KYC (Know your Customer) done. For the purposes of this scheme, the main KYC would be the Aadhaar number. If you hadn’t enrolled for Aadhaar at the time of applying for the scheme, you can give it at a later date.
- The applicant should not have a pre-existing APY account.
How to apply for APY
Most bank branches offer the Atal Pension Scheme. You can approach the bank in which you have a savings account.
You will need to fill a subscriber registration form with your personal details. These will include your name, date of birth, address, nominee’s name, bank account number and so on.
Provide your Aadhaar card and mobile number.
Make sure you have enough balance in your account to meet monthly contributions.
How much you need to contribute to get various pension amounts
|Age||Rs. 1000||Rs. 2000||Rs. 3000||Rs. 4000||Rs. 5000|
|18 yrs||Rs. 42||Rs. 84||Rs. 126||Rs. 168||Rs. 210|
|19 yrs||Rs. 46||Rs. 92||Rs. 138||Rs. 183||Rs. 228|
|20 yrs||Rs. 50||Rs. 100||Rs. 150||Rs. 198||Rs. 248|
|21 yrs||Rs. 54||Rs. 108||Rs. 162||Rs. 215||Rs. 269|
|22 yrs||Rs. 59||Rs. 117||Rs. 177||Rs. 234||Rs. 292|
|23 yrs||Rs. 64||Rs. 127||Rs. 192||Rs. 254||Rs. 318|
|24 yrs||Rs. 70||Rs. 139||Rs. 208||Rs. 277||Rs. 346|
|25 yrs||Rs. 76||Rs. 151||Rs. 226||Rs. 301||Rs. 376|
|26 yrs||Rs. 82||Rs. 164||Rs. 246||Rs. 327||Rs. 409|
|27 yrs||Rs. 90||Rs. 178||Rs. 268||Rs. 356||Rs. 446|
|28 yrs||Rs. 97||Rs. 194||Rs. 292||Rs. 388||Rs. 485|
|29 yrs||Rs. 106||Rs. 212||Rs. 318||Rs. 423||Rs. 529|
|30 yrs||Rs. 116||Rs. 231||Rs. 347||Rs. 462||Rs. 577|
|31 yrs||Rs. 126||Rs. 252||Rs. 379||Rs. 504||Rs. 630|
|32 yrs||Rs. 138||Rs. 276||Rs. 414||Rs. 551||Rs. 689|
|33 yrs||Rs. 151||Rs. 302||Rs. 453||Rs. 602||Rs. 752|
|34 yrs||Rs. 165||Rs. 330||Rs. 495||Rs. 659||Rs. 824|
|35 yrs||Rs. 181||Rs. 362||Rs. 543||Rs. 722||Rs. 902|
|36 yrs||Rs. 198||Rs. 396||Rs. 594||Rs. 792||Rs. 990|
|37 yrs||Rs. 218||Rs. 436||Rs. 654||Rs. 870||Rs. 1,087|
|38 yrs||Rs. 240||Rs. 480||Rs. 720||Rs. 957||Rs. 1,196|
|39 yrs||Rs. 264||Rs. 528||Rs. 792||Rs. 1,054||Rs. 1,318|
|40 yrs||Rs. 291||Rs. 582||Rs. 873||Rs. 1,164||Rs. 1,454|
Benefits of APY
Financial security in old age: There are very few schemes that offer pension benefits to those working in the unorganised sector. So APY will be very helpful to ensure financial security in old age for this class of people. Pensions range from Rs 1,000 to Rs 5,000, and could be higher if returns from the contributions are higher.
Convenient: Since pension contributions are auto-debited from the bank account, subscribers don’t have to fill out slips, wait in lines at banks and so on. It also instils some amount of discipline, since the amounts are deducted automatically.
Safe: Since it is backed and guaranteed by the government, it is a safe investment with zero risk. Most of the investments are made in safe avenues like government securities and term deposits with banks. Of course, returns may not be as high as in other avenues like equity, but that’s the price you pay for safety.
Easy to open: It’s very easy to open an APY account. In some banks, an APY module is integrated with their own systems. So to open an account, all a bank has to do is enter the savings account number of the prospective subscriber, and his or her details are fetched automatically from the bank’s database. The subscriber will then be allotted a Permanent Retirement Account Number (PRAN) immediately. Thereafter, the contributions can be auto-debited from the subscriber’s bank account. It’s also possible to open an APY account through Internet banking.
Tax benefit: There’s a benefit under Section 80CCD for contributions made to the Atal Pension Yojana.
Pension to spouse: The scheme provides protection to the spouse in the event of the untimely death of the subscriber before the age of 60. In that case, the pension will be given to the spouse.