There are many investments that we must look upon to make our tomorrow secure from any financial problems. For government employees, there are so many ways like GPF, PPF, and many more. Thus, for the unorganized sector, there are various schemes came into force. Atal Pension Yojana or APY is one of them. So, let’s know more about it!
What Is Atal Pension Yojana?
In this article
Atal Pension Yojana or APY is implemented with an objective to provide the pension benefits to individuals in the unorganized sector. Pension Funds Regulatory Authority of India (PFRDA) synchronizes this plan. However, those who are in the organized sector and have no recourse for pension can also apply for this scheme.
The Central Government of India has launched three programs:
- Jan Suraksha schemes during 2015-16, Atal Pension Yojana (APY),
- Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), and
- Pradhan Mantri Suraksha Bima Yojana (PMSBY).
Due to immense public response from the Pradhan Mantri Jan Dhan Yojana to avail banking with zero balance account, our former Finance Minister Late Shri Arun Jaitley decided to create an expanded and enhanced version of the National Pension Scheme., i.e., Atal Pension Yojana. It is a replacement for the former Swavalamban pension Yojana. In Atal Pension Yojana (APY), the investor will receive their accumulated amount as a monthly payment, just as a regular income.
In case, if you (the investor) pass away, your family or better half avails of it. However, if both, i.e., you and your spouse pass away, your nominee will receive the bulk of the amount. Hence, it’s a source of income in old age.
Thus, it helps people of retirement ages to save money for future needs. The entire bulk pension money depends on the amount you devote towards it every month. Added to this, your age is also taken into consideration. One can get this amount from the age of 60 years.
What Are The Extensions We Have From NPS In APY?
APY was launched in 2015 by Finance Minister Arun Jaitley. On the one hand, where NPS is for everyone, APY focuses on the unorganized sector. According to a circular issued by the Income Tax Department in 2016, contributions to APY will be eligible for the same tax benefit as NPS.
The customer should be at least 18 years of age to open an NPS account. The maximum age is 55 years. For APY, a person must be 18 years or older to apply. The maximum age for contributing is 40 years.
There is no maximum investment limit for NPS, whereas APY works on a predetermined monthly contribution. Suppose you start investing as early at the age of 18 and invests Rs 210 per month for 42 years of his life. Then you will earn Rs 5,000 periodically.
c. Minimum Investment
Under the NPS scheme, you have to contribute a minimum of Rs 500 per month, while under APY, there are three payment modes for contribution: monthly, quarterly, and half-yearly. Thus, you’re required to pay a monthly payment of Rs 42 to get a minimum guaranteed return of Rs 1000.
Under the APY scheme, returns get decided beforehand. The return ranges from Rs 1000 to Rs 5000, with the denominations of 1000. For NPS, returns get associated with markets. This means that returns for NPS customers can vary depending on various factors, such as market movement.
e. Premature Withdrawal
As per APY rules, you’re not allowed to withdraw money before the tenure ends. However, in case you die or have a severe medical condition, you shall be entitled to withdraw the amount. For NPS, premature withdrawals will only be allowed in Tier 2 accounts.
Features of Atal Pension Yojana:
1. Raising The Amount Of Subsidy:
As stated above, the amount of pension at your 60s solely depends on how much money you had devoted towards this. Apart from that, it also includes how early you had started investing. These pension amounts vary with the different contributions you made in your producing ages. It may happen that you may devote more bucks towards this plan. As certainly, it will yield bigger fruits in the future.
To make your way easier, the government has laid other paths too. Now, you can add up or deduct from your actual payment towards this every month. Let’s say in a month; you had other prioritized expenditures too. So, indeed, you’ll not be able to devote more money towards this. In that case, you’ll have to decrease your subsidy. Thus, the thread is in your hand itself. When to lose and when to tighten, it’s completely your choice. All you need to do is consult your bank branch manager about it and work upon the necessity.
It gives you the facility of auto-debit, so you should not take this into consideration. It will be paid automatically. The only thing you need to consider is the sufficient balance in your account, which is linked with the APY account so as not to penalize yourself.
It can be provided into denominations of Rs. 1000, Rs.2000, Rs.3000, Rs.4000, Rs.5000, depending on your monthly contributions.
This scheme has an age restriction between 18 to 40 years. So college students can also invest in this scheme, and the maximum bar is of 40 years because in this scheme you have to contribute for at least 20 years.
5. Premature Withdrawal:
You’re not permissible to extract the amount earlier than the requisite day. However, in cases like any severe illness or death, you’re permissible for withdrawal. You can get the total amount you expended for such cases.
However, if you discontinue the plan before turning 60s for any reason except stated above, you’ll be in a great loss. Although the sum and interest you earned on that sum, will get paid back to you. Yet you won’t get granted for any government gifts or extra bucks on the interest earned on your sum.
After attaining the age of 60 years, you will be eligible to withdraw the entire amount after the closure of the scheme with the bank concerned, i.e. get a monthly pension. You can also take all the reimbursements in case of any tragic illness before attaining the age of 60.
6. Penalty Charges:
If you miss your payments, a penalty will be imposed. A fine of Re. 1 is imposed on the monthly endowment of Rs. 100 and more.Fine of Rs. 2 is imposed on the contribution of Rs. 101 to Rs.500.
Rs. 5 fine will be imposed on the contribution of Rs.501 and Rs. 1000.Rs. 10 will be imposed on the contribution of Rs. 1000 and above. If in case you’re unable to pay your subsidy for 6 months, your account gets seized temporarily. However, if the delay continues until 12 months or more, it collapses on its own. Then, your entire amount gets paid back to you.
7. Tax Deduction:
The tax deduction portion of this scheme falls under section 80CCD. As per section 80CCD, a max of 10% of your total basic wage. However, the max limit is Rs. 1,50,000. Additional discount of Rs. 50,000 is allowed under Section 80CCD (1B) for devoting to Atal Pension Yojana.
Monthly Contribution For Atal Pension Yojana Chart Age-Wise
According to different ages, you must deposit dissimilar contributions. Keeping the fact of how much pension you want after 60, the payment varies. This graph will help you understand and analyze according to your specifications.
Benefits Of Atal Pension Yojana:
1. Regular Income Source For Old Age:
This scheme financially enables you in the age of 60s to meet your necessities. This is specially made for the ones working in unorganized sectors, e.g., Maids, gardeners, etc. In case of any illness or accident, this scheme provides a sense of security to all such crowds.
Unfortunately, if you pass away, your wife gets to avail of it. However, there are situations where both the investor and his wife dies. Then, the nominee has the choice to avail the entire amount. He can deactivate the account and receive the same pension money. The nominee can be a legal heir or any other family member.
3. For Unorganised Quarter:
Why should government employees avail of all opportunities? Some get diverted towards the corporate sectors as well. For making their lives easier, this plan got implemented. Although ones who are in the organized sector and had no recourse to a pension can also apply for this Yojana.
This scheme gets backed by the government, so there is no means of loss or risk. Your hard-earned money is in protective hands.
Eligibility Criteria Of Atal Pension Yojana
i. You must be an Indian civilian.
ii. You must have a legitimate active contact number.
iii. Make sure your account is well tied-up with Aadhar Card.
iv. You must be in the age bracket of 18 to 40 years.
v. You must not be a part of other welfare plans.
vi. The min duration that you must fund to your account is 20 years.
Beneficiaries of Swavalamban pension Yojana are automatically migrated to this scheme.
Characteristics For Atal Pension Yojana
- All nationalized banks offer this scheme. You can choose these banks to open your APY account.
- Atal Pension Yojana can be accessed from online portals or from the other banks. This form can also be downloaded from the official site.
- The forms are in service in English and Hindi and seven other regional languages, i.e., Bangla, Gujarati, Kannada, Marathi, Odia, Tamil, and Telugu.
- Pen down the blanks in the form, after filling, handover them to the bank for further work.
- If you have not already provided a contact number to the bank, provide a valid mobile number.
- Also, carry with yourself two scanned pictures of your Aadhar card.
Frequently Asked Questions
1. Is it feasible for me to subscribe to the APY pension plan? What if I’ve not opened a savings account yet?
2. Is it mandatory to declare a candidate while applying for Atal Pension Yojana?
3. Can I accumulate more than one pension accounts under this scheme?
4. Is there any way how I can apply for it online?
5. What documentation you must carry with yourself to submit for this scheme?
6. How can I know if my scheme is functioning well or not?
7. When is the last date to which I can join the Atal Pension Yojana?
8. Is the money invested in this plan safe? Will the plan face any kind of transformation if the party changes?
9. What is the age tenure to join this scheme?
Pension getting is another beautiful stage of life. Getting ripened fruits for a tree, you grew in the past is something to cherish for! I hope this article helped you in enlightening your views.