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.
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.
In order to be eligible to open an account under APY, individuals:
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
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.
Talk to our investment specialist
The Atal Pension Yojana benefits are enumerated below
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.
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.
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.
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.
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.
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.
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.
The frequency of contribution can be monthly, quarterly, or half-yearly depending on the individual’s investment preferences.
In this scheme individuals start to receive pension once they turn 60 years old.
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.
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.
In case of Atal Pension Yojana, an individual’s spouse can claim the pension in the event of the death of the depositor.
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:
Similarly, if the payments are discontinued, over a specified tenure, then the following action will be taken:
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.
|Desired Pension Amount
|Monthly Investment Amount
|Total Contribution Tenure
|Total Contribution Amount
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
So, if you are planning to lead a financially independent life post-retirement, then, invest in Atal Pension Yojana.