Among the most important government schemes that provide financial security in retirement, is Atal Pension Yojana. The APY was first introduced by the Government of India in 2015. This pension scheme targets individuals who are in the unorganized sector. Let’s have a look at the features, benefits, and how to enroll for this APY.
What is Atal Pension Yojana (APY)?
Atal Pension Yojana (APY) is a social security scheme that offers a guaranteed monthly pension to a subscriber who attains the age of 60 years. The scheme was designed to cover workers in the unorganized sector, thereby ensuring that they will enjoy old-age finance.
Key Features of APY
- Eligibility: Any Indian citizen between the ages of 18 and 40 can join the scheme.
- Minimum Contribution Period: 20 years (one has to contribute regularly to reap the pension at age 60).
- Monthly Pension: The monthly pension is different, and the amount is chosen according to the contribution made by the individual.
- Guaranteed Pension: The pension is guaranteed by the Government of India.
- Tax Benefits: APY gives tax benefits under section 80CCD(1) of the Income Tax Act.
How Does Atal Pension Yojana Work?
To comprehend how the APY works let’s break it down:
Enrollment Process
Step 1: Go to the nearest bank or post office that provides APY.
Step 2: Fill up the APY application form with your details.
Step 3: Select the monthly pension amount you want to get after 60 years of age (₹1000, ₹2000, ₹3000, ₹4000, or ₹5000).
Step 4: Share your bank account and Aadhaar details.
Step 5: Pay the first contribution to open your APY account.
Contribution Amount
Your monthly contribution will depend on the age at entry and pension amount you choose. Below is the table showing contribution required according to your age.
| Age at Entry | ₹1000 Pension | ₹2000 Pension | ₹3000 Pension | ₹4000 Pension | ₹5000 Pension |
| 18 | ₹42 | 84 | 126 | 168 | 210 |
| 25 | ₹70 | 140 | 210 | 280 | 350 |
| 30 | ₹92 | 184 | 276 | 368 | 460 |
| 35 | 121 | 242 | 363 | 484 | 605 |
| 40 | 151 | 310 | 465 | 620 | 775 |
Pension Payment
After you reach 60, you will start getting the pension. The amount is transferred to your bank account every month. It is also important to note that the pension continues for life, providing a steady income stream in your retirement years.
Benefits of Atal Pension Yojana
- Financial Security in Old Age: The APY ensures that the people from the unorganized sector, who would not have any retirement savings, can live with financial independence after retirement.
- Fixed Monthly Pension: APY ensures a fixed monthly pension amount with inflationary rise so that the purchasing power is maintained over time by the beneficiary.
- Government Backed: As the scheme is backed by the Government of India, there is a high level of trust and assurance of payments.
- Low Contribution Rates: Even at a low contribution per month, APY offers a decent amount of pension at the time of retirement. Hence, it is an affordable scheme for people working in the unorganized sector.
Eligibility Criteria for Atal Pension Yojana
- Indian citizens aged between 18 and 40 years.
- He/She should have a valid mobile number linked to Aadhaar.
- He/She should have a savings bank account with a bank or post office.
- APY or any other pension scheme enrollment is not allowed for him.
Who Should Join the Atal Pension Yojana?
For Salaried Employees
Even if you are a salaried person, you can join APY as it can be an excellent supplement to your retirement savings. It offers a pension in addition to any other retirement plans you may have.
For Unorganized Sector Workers
For someone working in the unorganized sector, APY is the ideal scheme because these people are not having a pension scheme at work. The most common people covered under this include daily wage earners, small businessmen, and other self-employed workers.
How Much Pension Can You Get?
APY offers a fixed monthly pension between ₹1000 and ₹5000 based on your contribution. The pension amount is based on the age at which you start contributing. The earlier you join, the lesser the contribution, and the more significant the pension at retirement.
Question & Answer Section
Q1: Can I choose my pension amount in Atal Pension Yojana?
Yes, you may choose the amount of your pension (₹1000, ₹2000, ₹3000, ₹4000, or ₹5000) based on your planning.
Q2: What if I cease contribution to Atal Pension Yojana?
In case you don’t pay contribution for more than 6 months, then the account gets deactivated. You may continue paying, and then your account is activated by payment of pending contributions.
Q3: Can I withdraw at an age less than 60 under the Atal Pension Yojana?
No, because one of the objectives of this is to give pension post the completion of 60 years. However, in case of urgency, you may opt out after completing 5 years, but you will have to forsake the scheme.
Q4: What is the tax benefit of Atal Pension Yojana?
APY provides tax benefits under Section 80CCD(1) of the Income Tax Act. Contribution made for the scheme gets exempted from tax by reducing it from your taxable income.
Frequently Asked Questions (FAQs)
1. Is Aadhaar mandatory for enrollment in APY?
Yes, an Aadhaar number is compulsory for opening an APY account.
2. Do I get to opt for increasing the pension amount later?
No, once that pension amount is chosen upon enrollment, it is not possible to change it.
3. Do I get penalized for missing contributions?
Yes, failure in making contributions may lead to deactivation of accounts.
4. How do I track my APY balance?
You can always visit the bank or your passbook to know your APY balance.
Conclusion
The Atal Pension Yojana is a brilliant initiative to provide financial security to those who may not have access to other pension schemes. With low contribution rates and government backing, it offers a fantastic way to plan for the future, especially for workers in the unorganized sector. If you are aged between 18 and 40, you can benefit from this scheme by enrolling today. The earlier you start, the better your retirement will be!
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