All you need to know about Atal Pension Yojana

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.

 

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.