What is Atal Pension Yojana

The Atal Pension Yojana is a government backed pension scheme launched in India that aims to provide pension benefits to the unorganized sector. Since the unorganized sector accounts for a substantial por

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How Does Atal Pension Yojana Work?

Atal Pension Yojana aims to reduce the burden of financial requirements that individuals have throughout their retirement years by encouraging early savings. The amount of pension a person will receive is directly proportional to the amount of monthly contributions they choose to make in the Atal Pension Yojana and their age.

The accumulated corpus of Atal Pension Yojana (APY) will be paid out in regular instalments to the beneficiary. If a beneficiary is no more, their spouse will continue to receive pension benefits. In case of both their demise, the beneficiary's nominee will get the money in a lump sum.

Subscribers to APY have the option of receiving a Fixed Monthly Pension amount of Rs. 1000, Rs. 2000, Rs. 3000, Rs. 4000, or Rs. 5000 by paying a monthly subscription as shown in the table below:

Age of Entry	Years of contribution	Monthly pension of Rs 1000	Monthly pension of Rs 2000	Monthly pension of Rs 3000	Monthly pension of Rs 4000	Monthly pension of Rs 5000
18	42	42	126	168	210	210
19	41	46	92	138	183	228
20	40	50	100	150	198	248
21	39	54	108	162	215	269
22	38	59	117	177	234	292
23	37	64	127	192	254	318
24	36	70	139	208	227	346
25	35	76	151	226	301	376
26	34	82	164	246	327	409
27	33	90	178	268	356	446
28	32	97	194	292	388	485
29	31	106	212	318	423	529
30	30	116	231	347	462	577
31	29	126	252	379	504	630
32	28	138	276	414	551	689
33	27	151	302	453	602	752
34	26	165	330	495	659	824
35	25	181	362	543	722	902
36	24	198	396	594	792	990
37	23	218	436	654	870	1087
38	22	240	480	720	957	1196
39	21	264	528	792	1054	1318
38	42	42	126	168	210	210
40	22	291	582	873	1164	1454

Features of Atal Pension Yojana

The Atal Pension Yojana guarantees returns during the retirement period or at the end of the policy's term. Here are some features you should know about it:

1. Option to Increase Contribution

An individual is eligible to receive an Atal Pension Yojana pension once you reach the age of 60. The amount of your pension is determined by how much you contribute to this plan. As a result, you may elect to make bigger contributions in order to receive a larger pension later. The Indian government permits the quantity of the corpus to be changed by increasing or decreasing the contribution facility. This service is only available once a year.

2. Withdrawal Policies

If you are a beneficiary of the Atal Pension Yojana and reach the age of 60, you are eligible to annuitize the entire corpus amount, which means you can get a monthly pension after terminating the scheme with your particular bank. It's worth noting that you can only leave the scheme before 60 years if you have a terminal disease or die. The spouse is entitled to the pension if the husband or wife dies before reaching the age of 60. In this instance, the spouse has the option of choosing pension benefits or exiting the APY with the collected corpus. If you opt to leave the Atal Pension Yojana before reaching the age of 60, you will only get your cumulative contributions and earned interest.

3. Auto-debiting

The facility of automated debit is one of the key advantages of the Atal Pension Yojana. A beneficiary's bank account is linked to their pension account, and monthly contributions are debited immediately. Individuals who have enrolled in this scheme must ensure that their accounts have adequate funds to accommodate such automatic debits; otherwise, a penalty will be imposed.

4. Guaranteed Pension

Depending on their monthly contributions, beneficiaries of the scheme can opt to receive a monthly pension of up to Rs. 5000.

5. Restrictions on Age

Individuals over the age of 18 and under the age of 40 can invest in the Atal Pension Yojana. As a result, even college students can participate in this scheme to build a retirement fund. The maximum age limit for participation in the programme has been set at 40 years, because contributions to the system must be paid for at least 20 years.

6. Penalty Conditions

The following penalty costs apply if the recipient fails to pay their contributions on time. –

Monthly Contribution Amount	Penalty Amount
Rs. 100	Re. 1
Rs. 101 - Rs. 500	Rs. 2.
Rs. 501 - Rs. 1000	Rs.5
Rs. 1001 and above	Rs. 0

If there is a 6 month payment default, the account will be frozen, and if there is a 12 month payment default, the account will be terminated, and the amount owed, including interest, will be refunded to the user.

Benefits of Atal Pension Yojana

The following are the various Atal Pension Yojana benefits you should know when investing in the plan to build a secure future:

1. Retirement Benefit

The retirement benefit is the most important component of the Atal Pension Yojana. The monthly pension will be handed out based on the payments made. There are five distinct pension amounts: 1,000, 2,000, 3,000, 4,000, and 5,000 rupees. These pensions have varying contribution levels.

2. Death Benefit

The spouse of the contributor, who is the default nominee of the policy upon the contributor’s demise, receives the Atal Pension Yojana death benefits. In the event of the contributor's and spouse's deaths, the nominee will get the predetermined corpus amount for the specific pension slab. If a contributor dies before reaching the age of 60, their spouse has the option of continuing the Atal Pension Yojana account and receiving benefits.

3. Source of Income

After reaching the age of 60, individuals are provided a continuous source of income, allowing them to cover basic needs such as medication, which is fairly frequent in old age.

4. Pension plan backed by the government

The Indian government backs this pension plan, which is governed by the Pension Funds Regulatory Authority of India (PFRDA). As a result, individuals are not in risk of losing their pension because the government guarantees it.

5. Exemptions from Taxes

Individual contributions to the Atal Pension Yojana are tax deductible under Section 80CCD of the Income Tax Act of 1961. The highest exemption granted under Section 80CCD (1) is 10% of the relevant individual's gross total income up to a limit of Rs. 1,50,000. Section 80CCD allows for an extra deduction of Rs. 50,000 for payments to the Atal Pension Yojana Scheme (1B).

Regardless, it is recommended that you consult a professional for these exemptions, as they are based on particular provisions in the Income Tax Act.

Tax benefits as per prevailing tax laws, subject to change

How Can I Apply for Atal Pension Yojana?

The Atal Pension Yojana scheme is available at all nationalized banks in India, and you can open an APY account with any of them. Here are things you need to do to apply for the plan:

To apply for the Atal Pension Yojana, you must either download an application form or go to a nationalized bank and fill it out. Forms for the Atal Pension Yojana are available both online and at the bank. The form can be downloaded from the official website.
For verification, make sure you have a self-attested photocopy of your Aadhaar as well as the original.
Then, specify the payment frequency, such as monthly, quarterly, or half-yearly. You have successfully enrolled to the APT after submitting the application form and KYC information.
When your application is approved, you will receive a confirmation message.

Eligibility Criteria for Atal Pension Yojana

The following are the eligibility requirements for the Atal Pension Yojana..

A savings account linked to an Aadhaar card number and a registered mobile number.
The applying individual should be between the ages of 18 and 40.
The minimum duration of contribution in the plan is 20 years.

Key Things You Need to Know

The amount of your monthly payment is determined by the amount of pension you intend to receive when you retire and the age at which you begin contributing.
Because you will be making regular contributions, your account will be deducted automatically. Before each debit, double-check that your account balance is sufficient.
You have the option to increase your premium at any time. All you have to do now is go to your bank, speak with your manager, and make the appropriate modifications.
If you do not make your payments on time, you will be charged a penalty, depending on the amount of the monthly contribution.
If you miss six payments in a row, your account will be frozen; if you miss twelve payments in a row, your account will be cancelled, and the remaining amount will be given to the subscriber.
It is not permissible to withdraw early. Only in exceptional circumstances, such as death or terminal illness, would the subscriber or their nominee be reimbursed in full.
Only your deposit plus interest earned will be repaid if you close the scheme before reaching the age of 60 for whatever reason. You will be ineligible for the government's co-contribution as well as any interest earned on that sum.

Frequently Asked Questions (FAQs)

1. What are the documents required to apply for the APY Scheme?

2. Can one open an APY account without having a savings account?

3. What if my savings bank account has insufficient balance?

4. Who is not eligible to receive Government co-contribution under APY?

5. How much should I contribute towards APY?

6. Is it mandatory to declare a nominee when applying for Atal Pension Scheme?

7. What is the mode of contribution to Atal Pension Yojana?

8. Can I open two Atal Pension Yojana accounts?

ARN No: Feb22/Bg/08C

Sources:

https://www.pfrda.org.in/myauth/admin/showimg.cshtml?ID=870

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