Atal Pension Yojana – Know about its Benefits, application process & eligibility!

The Atal Pension Yojana – APY is a retirement program that provide pension benefits to the unorganised sector, which accounts for a sizeable share of the country’s overall labour force. The Swavalamban Yojana, which had few applications since it did not guarantee pension payments at age 60, was intended to be replaced by the new program. The APY’s investment objective is to give older persons with social security, especially the outcasts and the poor. In contrast to the Swavalamban Yojana, this program guarantees returns throughout the retirement period or the policy’s end of term.

The APY Scheme aims to reduce longevity risks among unorganised sector employees and provide the working poor with long-term economic stability. It motivates employees in the unorganised sector to make voluntary retirement savings. Starting on 1st July 2015, the government implemented the program. Swavalamban Yojana and NPS Lite are replaced by this program.

What does Atal Pension Yojana mean?

The APY Scheme is an Indian government-initiated social security program that intends to provide all Indian people with a steady income once they age 60. To put it another way, it’s a pension plan that largely benefits those who work in the unorganised sector of the economy, such as housekeepers, maids, delivery drivers, gardeners, etc.

By assuring that people are unconcerned about unforeseen sickness, accidents, or chronic ailments in old age, this program’s primary goal is to provide Indian residents with a sense of security. It is not simply the unorganised sector; those working for companies without pension benefits & employees in the private sector are both eligible to apply.

Atal Pension Yojana's objectives

The APY’s major goal may be encapsulated as follows:

  •     Protection for residents’ safety, health, and health from accidents, illnesses, and other harm.
  •     The unorganised segment of the economy is the primary target of this program.
  •   Amounts from the accumulated corpus will be paid under the APY. Payments from the pension will be provided to the beneficiary’s spouse in the event of their demise. A lump sum distribution will be provided to the nominee in the case of the demise of the beneficiary and their spouse. 

Eligibility Conditions for APY Scheme

You must meet the standards listed below to receive benefits under the Atal Pension Yojana:

  •       A resident of India is required.
  •       Ages 18 to 40 are required.
  •       should put in contributions for at least 20 years.
  •       You must link your Aadhar to your existing bank account.
  •       Require a working contact number
  •   People who are currently receiving benefits under the Swavalamban Yojana will automatically transition to the APY.

Facts regarding APY that are crucial to know

  •     The funds will be automatically deducted from your account since you will be making recurring payments. Before each debit, you must confirm that there is enough money in your account to cover it.
  •     You have the discretion to raise your premium. You only need to go to your bank, speak with your manager, and make the required adjustments.
  •       You will be assessed a fee if you fall behind on your payments. For every donation of 100 rupees or less, there is a monthly fine of 1 rupee.
  •   Your account will be locked if you fall behind on payments for six months; if this happens for a full twelve months, the account will be cancelled, and the outstanding balance will be reimbursed to the subscriber.
  •     There is no tolerance for early withdrawal. The subscriber, or his or her nominee, will only be entitled to the whole sum returned in circumstances like death or terminal illness.
  •   If you terminate the plan before you reach 60 for any other reason, just your contribution plus interest will be refunded. The government’s co-contribution and any interest accrued on that sum will not be payable to you.

Atal Pension Yojana's salient characteristics

  •   A major social security program of the Ministry of Finance is the APY.
  •   After the Swavalamban Yojana/NPS Lite program was discontinued, it was introduced in 2015.
  •   It talks about how the working poor’s economic security in old age and the hazards associated with longevity for those employed in the unorganised economy.
  •   It motivates employees in the unorganised sector to make voluntary retirement savings.
  •   An ideal subscriber is between the ages of 18 and 40. This means that the subscriber would have to contribute for at least 20 years to qualify for APY.
  •   Through the National Pension System (NPS), the Pension Fund Regulatory and Development Authority (PFRDA) oversees its administration.
  •  The ratio of male to female subscribers as of 2020 is 57:43.
  •   Additionally, up until 2020, only 5% of those who were qualified for APY were covered.

How Do I Apply for the APY Scheme?

People who want to take advantage of the APY must first fill out a registration form, which is accessible on the PFRDA-authorised website, before submitting it to one of the nationalised banks. To be verified, people must carry both the original and a self-attested duplicate of their Aadhar card. You must specify the payment frequency in the application form, which can be monthly, quarterly, or biannually. You become a member of the Atal Pension Yojana after providing all the necessary information and submitting it.

To take advantage of APY, follow these procedures.

  •    This program is available from all nationalised banks. To open an APY account, you can do so at any of these institutions.
  •    There are forms for the Atal Pension Yojana both online and in the bank. Go to the authorised website to get the registration form.
  •    It is possible to fill out the forms in Hindi, English, Bangla, Kannada, Gujarati, Marathi, Tamil, Odia, and Telugu.
  •   Submit the registration form to your bank after filling it out.
  •   In case you haven’t previously given the bank your contact number, please do so.
  •   You must send a photocopy of your Aadhaar card.
  •  Upon application approval, you will get a confirmation mail.

Advantages of the APY Scheme

  • If a subscriber joins and pays between the ages of 18 and 40, he or she would get a fixed pension of between Rs. 1000 and Rs. 5000. When a subscriber signs up early, the contribution levels are low, and when s/he signs up later, the contribution levels are higher.
  • After the subscriber’s passing, the spouse will continue to get the same pension.
  • After the death of the spouse, nominees receive a return of the indicative pension wealth.
  • The APY Scheme & National Pension System (NPS) both offer tax advantages for contributions. The extra deduction of Rs 50,000 under section 80CCD(1) is included in the tax advantages.

Paperwork Needed for APY

The APY paperwork includes information about the bank and branch where the individual’s savings account is located, a properly completed APY registration form, mobile number OR an Aadhaar number, and information on the savings account’s balance.

Information on the bank and branch where the person’s savings bank account is stored, together with their completed APY registration form and Aadhaar or mobile number, are necessary for the monthly transfer.

How can I get my APY money?

A beneficiary’s death or the onset of a terminal illness may qualify for an exemption to the rule against early withdrawal from the APY program, which is 60 years old. The real departure scenarios are as follows:

  •       Reaching 60 years old: 100% of the subscriber’s pension wealth is annuitized
  •     Subscriber demise: When a spouse dies, the pension will still be accessible to them, and the pension corpus will be restored to the nominee.

Major Features of the APY Scheme

  •   The APY’s automatic withdrawal function is one of its most useful features. The monthly payments are deducted directly from the pension accounts of the beneficiaries, which are linked to the beneficiaries bank accounts. To avoid penalties, users who have signed up for this program must make sure their account has enough funds to cover such an automated deduction.  
  •   Possibility of increasing contributions: As we have mentioned, The amount of pension a person is eligible to get when they turn 60 is determined by their contributions. Different contributions result in different pension amounts. And people will likely decide to enhance their pension account contributions as a result of increasing financial capabilities to guarantee a higher retirement income later on in the scheme’s lifespan. To assist with this clause, the government provides the ability to change the corpus amount by raising or lowering one’s payments once a year.

Monthly Contribution to the APY Scheme

The regular contribution-based pension scheme known as APY ensures a pension of 1,000, 2,000, 3,000, 4,000, or 5,000 Indian rupees. The monthly payment you will make varies based on the kind of pension you select and your age upon registration. Pensions are only given to those who are 60 years old or older. Therefore, even if you start paying at the age of 40, you must do so for at least 20 years before your pension will start. The number of pension returns is impacted by your monthly payments.

Final words

For those who work in the private sector or in organisations without pension benefits, such as those that are not government-run, the Atal Pension Yojana (APY) is particularly advantageous.

What do you mean by APY- Atal Pension Yojana?

To offer social security to employees, mostly in the unorganised sector, the government implemented APY on 1st June 2015. After turning 60, subscribers to the program are guaranteed a minimum monthly pension ranging from Rs1,000 to Rs 5,000 based on their payments.

Whom does the Atal Pension Yojana want to benefit?

The working poor’s long-term financial stability and the longevity concerns faced by those employed in the unorganised sector are both addressed.

Who is responsible for APY administration?

Through the National Pension System (NPS), the Pension Fund Regulatory and Development Authority (PFRDA) oversees its administration.

Who can apply for APY Scheme?

The APY plan is open to all non-filing Indian citizens. The requirements for eligibility are as follows: -, The subscriber must meet the following requirements: (i) the age of the subscriber must lie between 18 years to 40 years; (ii) hold a post office savings account or savings bank account. When enrolling in the APY program, potential candidates may give the bank their contact number to get periodic updates on both the APY scheme and their APY account. Aadhaar may also be provided at the time of enrolment if the APY scheme has been informed about it.

How might becoming an NRI affect my account?

Only permanent residents of India are permitted to open an APY account. The account will be closed if you become an NRI. Your choice to exit the scheme before reaching 60 will be considered, and you will get the total amount of your cumulative contributions.

What is the age limit for APY Scheme?

An ideal subscriber is between the ages of 18 and 40. As a result, the subscriber would have to make a minimum commitment for 20 years or longer under the APY.

How many accounts under the APY may a subscriber open?

Each subscriber is only permitted to open one Atal Pension Yojana account, which will be their sole account.

What is the motive behind the APY scheme?

The government said that it will co-contribute 50% of the total contribution or Rs1,000 each year, whichever is less, to each qualifying subscriber account for a period of five years to encourage individuals to sign up for this plan and expand its reach. The only subscribers who were eligible for this co-contribution were those who had signed up for APY between June 1st, 2015, and March 31st, 2016, were not recipients of any social security benefits, and did not have any taxable income.

If I don’t have an Aadhaar number, can I still join the APY program?

An Aadhaar number is not required to create an APY account, but it will be necessary for enrolling spouses, beneficiaries, and nominees.

What would happen if my account balance is insufficient to cover my monthly contribution?

If there is not enough money in your account to cover your monthly donation, a fee will be charged.