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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.

APY Chart

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.

Source: moneycontrol

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