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

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.