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Atal Pension Yojana

Updated on November 20, 2024 , 138687 views

Atal Pension Yojana (APY) is a pension scheme launched by the Government of India with an aim to provide pension cover for workers belonging to unorganized sectors. This scheme was launched as a replacement of the previous scheme named Swavalamban Yojana, NPS Life, which wasn’t much prominent.

This scheme was launched with an objective to help the weaker sections of the society in which they can save up for their monthly pension and earn a guaranteed pension. It also extends to individuals who are working in private sector and are self-employed. So, let us have a complete understanding about the various aspects of Atal Pension Yojana or APY such as what is it, who are eligible to be a part of the scheme, how much will be the monthly contribution, and various other aspects.

About Atal Pension Yojana

Atal Pension Yojana or APY was launched in June 2015, under the flagship of the Prime Minister Mr. Narendra Modi. The scheme is administered by Pension Fund Regulatory and Development Authority (PFRDA) under the National Pension System (NPS). Under APY scheme, the subscribers get a fixed pension amount once they attain 60 years of age. It encourages people to opt for a pension plan that would be helpful for them during their old age.

The pension amount in this scheme ranges between INR 1,000 to INR 5,000 based on the individual’s subscription. In this scheme, the government also contributes 50% of the total prescribed contribution by a worker up to INR 1,000 per annum. There are five variants in the pension offered by this scheme. The pension amounts include INR 1,000, INR 2,000, INR 3,000, INR 4,000, and INR 5,000.

Who can Invest in the Atal Pension Scheme ?

In order to be eligible to open an account under APY, individuals:

Should be an Indian Citizen
Age limit should be between 18-40 years
Should have a valid Aadhaar number and mobile number
Individuals should have a valid Bank account.

How to Apply for Atal Pension Yojana?

Once you have all the details, you can approach a bank /Post Office in which you have your Savings Account and fill up the APY registration form. Individuals who believe more in technology can choose to invest in APY through online mode also.

All banks in India are empowered to initiate the opening of a pension account under the Atal Pension Yojana.

The descriptive steps to apply for APY are

Visit the nearest branch of the bank where you have an account.
Duly fill out the application form with required details.
Submit it along with two photocopies of your aadhaar card.
Provide your active mobile number.

One can also download the application form from the official website of a bank and then continue with the steps mentioned above. Here, the minimum investment amount differs based on the pension amount that the individual wishes to earn post-retirement.

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Benefits of Atal Pension Yojana?

The Atal Pension Yojana benefits are enumerated below

1. Source of income in old age

Individuals are provided with a steady source of Income after they reach 60 years, thus financially enabling them to meet basic requirements such as medications, which is fairly common in old age.

2. Government-backed pension scheme

This pension scheme is backed by the Indian government and regulated by Pension Funds Regulatory Authority of India (PFRDA). Hence, individuals carry no risk of loss as the government assures their pension.

3. Enabling the unorganised sector

The scheme was launched primarily with the motive to alleviate the financial worries of individuals who are employed in the unorganised sector, thus enabling them to be financially independent in their later years.

4. Nominee facility

In case of a beneficiary’s death, his/her spouse becomes entitled to the benefits of this scheme. They can either terminate their account and avail the entire corpus in a lump sum or choose to receive the same pension amount as the original beneficiary. In case of death of both the beneficiary and his/her spouse, a nominee shall be entitled to receive the entire corpus amount.

5. Other Key Benefits

Once a year, individuals can increase or decrease their pension amount during their investment tenure.
In the event of the death of the subscriber, the spouse is entitled to receive pension amount till his or her death.
In the event of the death of the spouse, the nominee is entitled to receive the pension money accumulated by the depositor till date.
Atal Pension Yojana is eligible for tax Deduction under Section 80CCD(1) of income tax Act, 1961, which includes additional benefit of INR 50,000.

Atal Pension Yojana Details

Minimum Investment

The minimum investment in case of Atal Pension Yojana differs based on the pension plans and the age of the investor. For instance, if an individual wishes to earn INR 1,000 as the pension amount post-retirement and is 18 years then the contribution would be INR 42. However, if the same individual wishes to earn INR 5,000 as pension post-retirement then the contribution amount would be INR 210.

Maximum Investment

Similar to minimum investment, the maximum investment also differs based on the pension plans and investor’s age. For example, the contribution is INR 264 for an individual who is 39 years old and wishes to have INR 1,000 as pension income, while it is INR 1,318 if the same individual wishes to have pension amount as INR 5,000.

Tenure of Investment

In this case, the individuals need to pay the contribution amount depending on the age at which they start to invest in Atal Pension Yojana. For instance, if an individual is 40 years old, then his/her maturity tenure would be 20 Years. Likewise, if an individual if 25 years old, then the maturity tenure would be 35 Years.

Frequency of Contribution

The frequency of contribution can be monthly, quarterly, or half-yearly depending on the individual’s investment preferences.

Age of Pension

In this scheme individuals start to receive pension once they turn 60 years old.

Pension Amount

Individuals get a fixed pension amount in case of Atal Pension Yojana. The pension amount is divided into INR 1,000, INR 2,000, INR 3,000, INR 4,000, and INR 5,000 which the individual wish to earn post-retirement.

Premature Withdrawal

There is no pre-mature withdrawal available in case of Atal Pension Yojana. Premature withdrawal is allowed only if the depositor dies or falls under terminal illness.

Pension Eligible for Spouse

In case of Atal Pension Yojana, an individual’s spouse can claim the pension in the event of the death of the depositor.

Atal Pension Plan – Penalties Charges & Discontinuance

Individuals are required to pay monthly subscription charges on account of account maintenance. If the depositor does not make regular payments then, the bank can levy penalty charges as mentioned by the government. The penalty charges depend on the investment amount, which is given below:

INR 1 penalty every month, if the contribution amount per month is up to INR 100.
INR 2 penalty every month, if the contribution amount per month is between INR 101 – INR 500.
INR 5 penalty every month, if the contribution amount per month is between INR 501 – INR 1,000.
INR 10 penalty every month, if the contribution amount per month is between INR 1,001.

Similarly, if the payments are discontinued, over a specified tenure, then the following action will be taken:

The depositor’s account is frozen in case of payments are due to 6 months.
The depositor’s account is deactivated in case of payments are due to 12 months.
The depositor’s account is closed in case of payments are due to 24 months.

Atal Pension Yojana Calculator & Chart

Atal Pension Yojana calculator helps individuals to calculate how much their corpus amount will be over time with their given investment amount. The input data that should be entered in the calculator includes your age and the desired monthly pension amount. This can be explained with an example.

Illustration

Parameters	Details
Desired Pension Amount	INR 5,000
Age	20 Years
Monthly Investment Amount	INR 248
Total Contribution Tenure	40 Years
Total Contribution Amount	INR 1,19,040

Based on the calculation, some of the contribution amount instances for various pension levels at different age is tabulated as follows.

Age of the Depositor	Indicative Investment Amount for Fixed Pension of INR 1,000	Indicative Investment Amount for Fixed Pension of INR 2,000	Indicative Investment Amount for Fixed Pension of INR 3,000	Indicative Investment Amount for Fixed Pension of INR 4,000	Indicative Investment Amount for Fixed Pension of INR 5,000
18 Years	INR 42	INR 84	INR 126	INR 168	INR 210
20 Years	INR 50	INR 100	INR 150	INR 198	INR 248
25 Years	INR 76	INR 151	INR 226	INR 301	INR 376
30 Years	INR 116	INR 231	INR 347	INR 462	INR 577
35 Years	INR 181	INR 362	INR 543	INR 722	INR 902
40 Years	INR 291	INR 582	INR 873	INR 1,164	INR 1,454

So, if you are planning to lead a financially independent life post-retirement, then, invest in Atal Pension Yojana.

Disclaimer:
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.