Atal Pension Yojana (APY) is a pension scheme mainly aimed at the unorganized sector such as maids, gardeners, delivery boys, etc.
The goal of the scheme is to ensure that no Indian citizen has to worry about any illness, accidents or diseases in old age, giving a sense of security. Private sector employees or employees working with such an organization that does not provide them pension benefit can also apply for the scheme.
There is an option of getting a fixed pension of Rs 1000, Rs 2000, Rs 3000, Rs 4000, or Rs 5000 on attaining an age of 60. The pension will be determined based on the individual’s age and the amount that you contribute towards it each month before you retire.
The Government would also make a co-contribution of 50% of the total contribution, or Rs. 1000 per annum, whichever is lower, to all eligible subscribers who had joined between June 2015 and December 2015 for a period of 5 years i.e., for financial years 2015-16 to 2019-20. To avail this additional contribution from the government, the subscribers should not be part of any other statutory social security schemes (For eg: Employee’s provident fund), or should not be paying income taxes.
To avail benefits from the Atal Pension Yojana, you must fulfill the below requirements:
- Must be a citizen of India.
- Must be between the age of 18-40
- Should make contributions for a minimum of 20 years.
- Must have a bank account linked with your Aadhar
- Must have a valid mobile number
Those who are availing benefits of Swavalamban Yojana will be automatically migrated to Atal Pension Yojana.
3. How to Apply?
Follow these steps to avail the benefits of APY
- All nationalized banks provide the scheme. You can visit any of these banks to start your APY account.
- Atal Pension Yojana forms are available online and at the bank. You can download the form from the official website.
- The forms are available in English, Hindi, Bangla, Gujarati, Kannada, Marathi, Odia, Tamil, and Telugu.
- Fill up the application form and submit it to your bank.
- Provide a valid mobile number, if you haven’t already provided to the bank.
- Submit a photocopy of your Aadhaar card.
You will be sent a confirmation message when the application is approved.
4. Monthly Contributions
The monthly contribution depends upon the amount of pension you want to receive upon retirement and also the age at which you start contributing. The following table tells you how much you need to contribute per annum based on your age and pension plan.
5. Important Facts to know about APY
- Since you will be making periodic contributions, the amounts will be debited automatically from your account. You need to make sure that you have sufficient balance in your account before each debit.
- You can increase your premium at your will. You just have to visit your bank and talk to your manager and make the necessary changes.
- In case you default on your payments, a penalty will be levied. A penalty of Rs. 1 per month for a contribution of every Rs. 100 or part thereof.
- In case you default on your payments for 6 months, your account will be frozen and if the default continues for 12 months, the account will be closed and the remaining amount will be paid to the subscriber.
- Early withdrawal is not entertained. Only in cases like death or terminal illness, the subscriber, or his/her nominee will receive the entire amount back.
- In the event that you close the scheme before the age of 60 for any other reason, only your contribution plus interest earned will be returned. You will not be eligible to receive the government’s co-contribution or the interest earned on that amount.
Wealth Cafe tip - This scheme is a helpful scheme for the unorganised sector as it will provide monetary support post their retirement (the age after which they cannot do labour infused work). People from organised sectors, options like PPF, EPF and Mutual funds are better for their retirement/pension planning.