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Last Updated : Jul 16, 2019 03:53 PM IST | Source: Moneycontrol.com

All you need to know about Atal Pension Yojana

APY Scheme provides guaranteed pension of between Rs 1,000 to Rs 5,000 for participants. Click here to understand what is Atal pension yojana and get the benefits.

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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.

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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
    •      
      AgeRs. 1000Rs. 2000Rs. 3000Rs. 4000Rs. 5000
      18 yrsRs. 42Rs. 84Rs. 126Rs. 168Rs. 210
      19 yrsRs. 46Rs. 92Rs. 138Rs. 183Rs. 228
      20 yrsRs. 50Rs. 100Rs. 150Rs. 198Rs. 248
      21 yrsRs. 54Rs. 108Rs. 162Rs. 215Rs. 269
      22 yrsRs. 59Rs. 117Rs. 177Rs. 234Rs. 292
      23 yrsRs. 64Rs. 127Rs. 192Rs. 254Rs. 318
      24 yrsRs. 70Rs. 139Rs. 208Rs. 277Rs. 346
      25 yrsRs. 76Rs. 151Rs. 226Rs. 301Rs. 376
      26 yrsRs. 82Rs. 164Rs. 246Rs. 327Rs. 409
      27 yrsRs. 90Rs. 178Rs. 268Rs. 356Rs. 446
      28 yrsRs. 97Rs. 194Rs. 292Rs. 388Rs. 485
      29 yrsRs. 106Rs. 212Rs. 318Rs. 423Rs. 529
      30 yrsRs. 116Rs. 231Rs. 347Rs. 462Rs. 577
      31 yrsRs. 126Rs. 252Rs. 379Rs. 504Rs. 630
      32 yrsRs. 138Rs. 276Rs. 414Rs. 551Rs. 689
      33 yrsRs. 151Rs. 302Rs. 453Rs. 602Rs. 752
      34 yrsRs. 165Rs. 330Rs. 495Rs. 659Rs. 824
      35 yrsRs. 181Rs. 362Rs. 543Rs. 722Rs. 902
      36 yrsRs. 198Rs. 396Rs. 594Rs. 792Rs. 990
      37 yrsRs. 218Rs. 436Rs. 654Rs. 870Rs. 1,087
      38 yrsRs. 240Rs. 480Rs. 720Rs. 957Rs. 1,196
      39 yrsRs. 264Rs. 528Rs. 792Rs. 1,054Rs. 1,318
      40 yrsRs. 291Rs. 582Rs. 873Rs. 1,164Rs. 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.

 

Atal Pension Scheme FAQs

Where will contributions to Atal Pension Yojana be invested?

According to investment norms set out by the Government of India, contributions to APY will be invested in government securities (45-50 percent of the total fund), debt securities and term deposits of banks (35-45 percent), money market instruments (under five percent), equity and related instruments (5 to 15 percent) and asset-backed securities (under five percent).

Is a savings account mandatory for APY?

Yes, you need a savings account in order to be a subscriber to APY.

Can I make contributions by cheque or cash?

No, you can’t do that. Contributions are made only through auto-debit from your savings account in your bank. You have to make sure there’s enough balance in your account when the auto-debit happens.

Will I have to pay a penalty if there isn’t enough funds in my bank account on the due date of my contribution?

Yes, you will have to pay a penalty if there aren’t enough funds to meet your contribution requirements. Here’s what you have to pay:

- For up to Rs 100 – Re 1 per month

- Rs 101 to 500 – Rs 2 per month

- Rs 501 to 1,000 – Rs 5 per month

- Above Rs 1,000 – Rs 10 per month

If you don’t make payments for six months, your account will be frozen, and closed after 12 months of non-payment.

What constitutes the corpus of the APY?

The corpus of the Atal Pension Yojana includes contributions from subscribers, the matching contribution made by the government (50 percent) and the interest earned on this amount.

When is a subscriber eligible for pension from the APY scheme?

A subscriber will be eligible for pension once he or she reaches the age of 60.

What if the subscriber dies before the age of 60?

In that case, the pension would be paid to the nominee of the deceased. If both parties are deceased, the amount will be handed over to the legal heir as a lump sum payment.

Is it possible to exit from the APY scheme prematurely?

Yes, it’s possible to exit from the scheme and claim the amount on the death of the beneficiary or if there is terminal illness. You can also withdraw from the scheme for other reasons, but you will have to forgo the government contribution and net actual interest accrued.

Is there an age limit for the pension after the age of 60?

No, there’s no age limit for the pension that you receive. You will continue to get it throughout your life.

Can I have more than one APY account?

No, only one account can be opened for each person.

Is it mandatory to declare a nominee while opening an APY account?

Yes, it is mandatory to declare a nominee while opening an APY account. You will also give details about the nominee, along with Aadhaar information.

How can I check the balance in my APY account?

Statements will be sent to the address you have given in your APY account once a year. You will also get SMS alerts which will be sent to your registered mobile phone number. You can also visit the NSDL site to check your APY transactions. Click on `APY e-PRAN/ Transaction Statement View’. You can use either PRAN or give various details (name, bank AC number, date of birth) etc to check your transactions.

Can I change contribution amounts to get lower or higher pensions?

Yes, you have the option of changing how much you contribute to the APY scheme. The option to make changes is available once a year in the month of April.

What is Permanent Retirement Account Number (PRAN), and is it needed for APY?

It’s mandatory to have a PRAN number to avail of government pension schemes like APY and National Pension System (NPS). You will be allotted a PRAN number at the time of opening an APY account.

Is Aadhaar number compulsory for joining the scheme?

You will need an Aadhaar number for opening an APY account. It will be the primary KYC document for identifying beneficiaries, spouse and nominees.

On what date will I have to pay my monthly contribution each month?

That will depend on the date on which you made the initial deposit in the scheme.

How do I make my contribution if I move to another place?

It will not affect your APY contribution since the amount is auto-debited from your account.


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First Published on Jul 16, 2019 03:53 pm
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