Atal Pension Yojana or APY
Atal Pension Yojana or APY
The financial planning for workers in the unorganised sector such as maids, drivers, gardener’s etc. this was launched in June 2015 by the government. This social security scheme was introduced as a replacement to all previous governments Swavalamban Yojana NPS lite
Swavalamban Yojana was the micro-pension scheme that was government backed targeted at the unorganised sectors in India. Under the scheme the Government of India contributed INR 1,000 per year to each NPS account opened in the year 2010–11 and for the next three years. The benefit was available only to people who joined the National Pension Scheme (NPS) with a minimum contribution of INR 1,000 and a maximum contribution of INR 12,000 per annum. This scheme has now been replaced with the Atal Pension Yojana.
The AIM of Atal Pension Yojana:
· It is to help these workers save money for their old age while they are working and guarantees return post retirement.
· The scheme also offers a promising co-contribution by the Central Government of 50% of the total prescribed contribution by a worker, up to INR 1,000 per annum, but only to those who have joined the APY before the 31st of December 2015.
Eligibility for the Atal Pension Yojana:
1. An Indian citizen
2. Have a valid bank account
3. You must be between the age of 18 and 40 years
What is the monthly contribution and mode of payment?
APY is a periodic contribution based on pension plans and promises a fixed pension of INR 1,000, INR 2,000, INR 3,000, INR 4,000 and INR 5,000. Your monthly contribution depends upon the fixed amount of monthly pension you want and the age when you start contributions end and pension starts at 60 years of age. Therefore, even if you join the APY at the age of 40 you would need to pay a premium for a minimum of 20 years to avail pension.
The following table elaborates on the monthly contributions based on your pension plan and age
Years of Contribution
Monthly Pension INR 1,000
Monthly Pension INR 2,000
Monthly Pension INR 3,000
Monthly Pension INR 4,000
Monthly Pension INR 5,000
Who is eligible for the pension amount if under the Scheme holder dies before the age of 60?
If the Atal Pension Yojana holder dies before the age of 60, then the nominee will get the pension. But in case both the nominee and scheme holder dies then the legal heir of the nominee will get the whole contribution as a lump-sum of a one-time payment.
How can the scheme holder check the status of their Atal Pension Yojana (APY) scheme account?
You can get an update about your Atal Pension Yojana scheme account in two ways:
1. You will receive a periodical SMS alert to the registered mobile number. To avail the SMS benefit you would need to include your mobile number while creating an APY scheme at the bank.
2. Physical Statement of the account will also be posted to the address updated at the time of opening the Atal Pension Yojana (APY) scheme account.
Is it applicable to make the contribution to the account by cheque?
No cheque facility is allowed for the scheme, the contributions are to be paid monthly through auto-debit facility from savings bank account of the Atal Pension Yojana (APY) scheme holder.
Benefits under the Atal Pension Yojana
· This scheme guarantees pension of INR 1,000 to INR 5,000 to the subscribers. The scheme also allows a subscriber to decrease or increase pension amount during the course of accumulation phase, once a year.
· In the case of the death of subscriber, the spouse of the subscriber shall be entitled to the same amount of pension till his or her death. And after the demise of both the spouse and subscriber, the nominee will be entitled to receive the pension money that the subscriber had accumulated till 60 years of age.
· If the subscriber dies before 60 years, the spouse will have the choice to either exit the scheme and claim the accumulated amount or continue maintaining the account under the subscriber’s name for the remaining vested years. The spouse of the subscriber shall be entitled to receive the same pension amount as the subscriber until the death of the spouse in the final case.
Restrictions on government contribution
However, if you are a part of any other social security scheme security scheme and a taxpayer, then you are not entitled to the government contribution. The members of the Social Security Schemes under the following enactments would not be eligible to receive Government co-contribution:
1. Employees Provident Fund & Miscellaneous Provision Act 1952.
2. The Coal Mines Provident Fund & Miscellaneous Provision Act 1948.
3. Assam Tea Plantation Provident Fund & Miscellaneous Provision 1955.
4. Seamen’s Provident Fund Act 1966.
5. Jammu Kashmir Employees Provident Fund & Miscellaneous Provision Act 1961.
6. Any other statutory social security scheme.
How to apply for APY?
· Approach the bank branch/post office where your savings bank account is held or open a savings account if you don’t have one and fill up the APY registration form.
· If you are a net savvy user you can get enrolled for APY through your savings account directly using the internet banking and choose auto debit facility for your contributions, the premium will be debited from your age of enrolment till 60 years.
Penalties for default
The deduction would be made in the subscribers account for account maintenance charges and other related charges on a periodic basis. Once the account maintenance charges, fees and overdue interest, the account would be closed immediately. If there is a continuous default for 6 months, the account will be closed and whatever balance is left after the above-said deductions will be given to the subscribers.
INR 1 per month for contributions up to INR 100 per month.
INR 2 per month for contributions up to INR 101 to 500 per month.
INR 5 per month for contributions up to INR 501 to 1,000 per month.
INR 10 per month for contributions up to INR 1001 per month.
Withdrawal procedure from APY Upon completion of 60 years of age:
· After attaining the age of 60 years, you need to get in touch with the bank or post office and submit a request for drawing the pension.
· If in the case of the death of the subscriber’s death after 60 years, the same amount of monthly pension is payable to the spouse. The nominee will be eligible for a return of pension wealth accumulated till the age of 60 of the subscribers upon the death of both the subscriber and spouse.
Exiting before the age of 60:
As per the circular dated May 2, 2016, on PFRDA website, the voluntary exit in APY is generally not permitted. However in the case of exceptional circumstances such as terminal illness or death of the subscriber, who has availed the government contribution under the APY, chooses to voluntarily exit APY at a future date, he shall only be refunded the contributions made by the scheme holder to the APY, along with the net actual accrued contribution income earned on his contributions (after deducting the account maintenance charges). The contributions (after deducting the account maintenance charges). The Government co-contribution and the accrued income earned on the Government co-contribution shall not be returned to such subscribers.